6 Merger and Acquisition Mistakes and How to Avoid Them

The reality in these modern times is that a surprisingly small amount of huge corporations control the majority of the economy.

If your business has any chance of monumental success, it needs to figure out how to grow into a corporate leviathan. Two of your best growth strategies are mergers and acquisitions.

Buying smaller companies and combining resources with other business entities sounds great on paper, but if you do it wrong it can have disastrous consequences.

Read on to learn about 6 merger and acquisition mistakes that can influence your company’s growth strategies. 

1. Not Doing Proper Research

Whether you are thinking of buying or merging with another company, you need to do adequate research before making the big deal.

Not doing adequate homework about your fellow company is one of the biggest merger and acquisition pitfalls. Research their profit margins, growth strategies, and historical data.

Make sure to inquire about their holdings and assets. Dig deep and find out all you can about your potential partner or purchase. 

2. Not Having Proper Legal Safeguards

At the very least you will want to have a non-compete agreement document drawn up at the time of your deal.

The last thing you want is for people at the company you are purchasing or merging with to turn around and start a new operation using your old strategies.

Another critical legal safeguard is a non-disclosure agreement. Things like trade secrets are your intellectual property, defend them accordingly.

3. Employee Merger and Acquisition Mistakes

You want to make sure that any new employees you sign on from the merger are integrated into your operation the right way. You don’t want any dead weight on your team. 

Also, keep in mind that you and the company you merged with/purchased may have had a very different way of doing business than you. Make sure to train any new employees in your ways of doing things.

4. Not Focusing on Key Positions

Mergers and acquisitions restructuring need to focus on key positions within your operation. This extends from the executive level down to the ground floor. This will help you reap the full benefits of mergers.

5. Poor Negotiation

If a company is willing to be bought out or merge with you, chances are you could crush them like a bug in a full-scale competition.

If on the other hand, you are merging with a more powerful entity, make sure that this is in your best interest or you may not get a fair deal. 

Make sure to negotiate favorable terms for acquisitions that reflect your stronger or weaker position. This may take a bit of diplomacy at the hands of a charismatic business expert.

There are many different types of businesses you can acquire and it is important to handle each differently. That said, don’t settle for a sale’s price that doesn’t reflect your company’s position.

6. Not Expecting Change

Everything from your company culture to market-share, revenues, and physical office space will change during a merger or acquisition. Make this apparent to your employees and expect major changes throughout your operation.

Grow Stronger Together

Merger and acquisition mistakes are easy to make if you don’t know what you are doing. If you don’t, you may fall victim to these 6 common mistakes.

Use the information in this guide to craft a successful merger and acquisition plan today. That way you and the companies you do business with can grow stronger together. For more info like this, check out the rest of our page!