Successfully shaping corporate acquisitions - 10 tips

1. Align your business goals with strategic growth objectives. A sound corporate strategy is the basis for all growth. Companies that want to grow strategically need a razor-sharp, well-thought-out strategy. Their M&A activities must follow the strategy - not the other way around.
2. Find and evaluate targets that meet your acquisition criteria. Acquisition criteria are derived from your corporate strategy. They allow you to compare the different targets, i.e. the companies that could be considered for acquisition, so that you can then pursue the deals that are most likely to achieve your growth targets.
3. Articulate the intended benefits of the acquisition, and plan each intermediate goal to be achieved to realize the overarching transactional benefit. Set out in writing the overriding business objective you want to achieve with the acquisition. For example: double sales in order to achieve higher earnings Or: open up new markets in order to secure the long-term existence of your company. Or: reduce production costs to remain competitive. In the second step, formulate the intermediate goals that need to be achieved in order to reach the overall goal.
4. Form an acquisition and integration team. Together, define the KPIs that measurably lead to the targeted increase in value. Acquiring and integrating a company requires a powerful M&A and PMI (Mergers & Acquisitions and Post Merger Integration) team pulling together. Involve your executives in acquisition and integration planning. Let them Key Performance Indicator (KPI), in other words, define key figures that make the degree of target achievement measurable.
5. Provide clarity regarding the operational model to be applied post-acquisition. Define: How should your current company and the acquired company work together in the future? For example, which business unit develops produces and sells which products? What will the processes look like in the future? For example, in sales? In the service area? Which personnel, which IT is required for this? Where will personnel management and controlling be located?
6. Develop a roadmap for integration that is linked one-to-one to transaction benefits and intermediate goals. Bring together the objectives, KPIs and measures and plan the detailed steps. Determine the responsibilities and deadlines. This roadmap is your management tool and the guide for implementing the project.
7. Make sure you have enough resources (including experienced ones) for planning and implementation. Once you have completed all these tasks, don't let your project fail due to a lack of manpower. Plan realistically for the necessary resources so that day-to-day business can continue unhindered.
8. Create a communications plan that sets the right tone on the day the acquisition becomes public and the day it becomes a reality, among other things. Projects for corporate acquisitions in which companies do not succeed in getting the majority of their team committed to the planned project fail - despite all the preparation and planning. Communication is the salt in the soup: it helps to avoid resistance and to create a spirit of optimism, i.e. the necessary motivation. In addition to the timing, the dose must be right, as must the content.
9. Implement your plan consistently. However, react flexibly to unforeseen events without losing sight of your goals. In M&A and PMI processes, you can't predict and plan for everything. Deviations from the plan sometimes have to be. Communicate this awareness to your team as well. Then you will find a solution together in each case.
10. Establish incentive systems that serve to generate value. Companies often set the wrong incentives in M&A and PMI projects; these often result in the parties involved having competing interests and different goals. This is where many M&A projects fail. When it comes to performance incentives, don't focus on closing the deal, but on making the PMI process a success and generating the value you hope for.

To the author:

Stephan Jansen is Managing Director of the M&A and PMI consultancy Beyond the Deal Germany, Frankfurt. The consulting firm primarily supports medium-sized companies in corporate acquisitions and company disposals; it also helps them to ensure the value of the deals through optimized transaction processes.