Merger and acquisition may seem like a plain-sailing term for most. However, the consequences that ensue can be radical and rather challenging for the employers and employees involved. 

While these terms are often used interchangeably, they in fact hold quite a different meaning. A company merger occurs when two companies of the same size come together to form a single organisation. Whereas, acquisition is when a company purchases another organisation and assumes ownership of the latter.  

That being said, when deciding on merging, acquiring or being acquired, it is important to set up a checklist that allows you to create a smooth transition for both your company and its employees. 

‍

1. Define your goals and objectives

‍

Listing out goals, objectives and your desired outcome should ultimately be one of your  first steps before making any radical decisions when it comes to M&A. While strategising your merging and acquisition plan, define and align your company objectives and ensure that you’re on the same page with the other organisation.

‍

This not only helps in rewriting your company vision and mission but also serves as a guide for employees in nudging them towards your shared goal.

‍

2. Analyse the financial health of both companies

‍

‍

Now this is a rather important step in making sure that your company is well enough to handle the repercussions of a merger or acquisition. 

While the aim in merging or being acquired by another organisation can vary from one company to another, ensuring a smooth M&A process heavily depends on the company’s ability to withstand the financial challenges that may be thrown in its way. 

Besides, it would not be advisable to merge with or acquire another company that is financially unstable or one that does not have a solid financial plan for the future. 

‍

3. Be diligent in your planning and execution 

From start to finish, mergers and acquisitions require a ton of diligent planning and execution to ensure an effective end goal for both parties. 

Establish a clear vision and the means to achieve it while constantly evaluating the process to determine what’s working and what’s not. In addition to that, it is also wise to establish any changes in roles, responsibilities and designation of every person in the organisation right from the CEO to the interns.

‍

‍

While the signing of the deal is merely a 5 -minute task, the integration process highly determines the success of a merger or acquisition. 

‍

4. Perform due diligence prior to the M&A

‍

Prior to deciding on a merger or acquisition, it is necessary for the company to perform a due diligence review on the other party to fully comprehend the risks and opportunities associated with the latter. 

This can include debts and liabilities among other things, which can result in irreversible damage to the company. Upon determining the risks involved -if any, both organisations can then strategise the best suited plan moving forward.  

‍

5. Create a solid leadership team 

‍

‍

The transitory process for a merger or acquisition can be an anxiety-inducing task for employers and employees of all levels. However, with a solid leadership team any dilemma that may arise from the M&A process may be effectively solved.

Determine the responsibilities assigned to those in the leadership team and clarify how they will be interacting and working with the members of the other organisation. It is important to note that without a clear understanding of the roles and objectives of the M&A themselves, the leaders are prone to facing difficulties in communicating them to their fellow underlings. 

While multiple companies across the globe have faced ruin at the hands of a poorly executed merging or acquisition, when done right, it can certainly help propel a business towards success. So heed these steps, and keep in mind that a good M&A strategy is mapped out from the get-go!