When it comes to acquisitions and mergers, you will find that no two deals are the same. However, there are some basic components that have to be taken into consideration for the effective execution of a successful acquisition.
John Binkley is the Chairman of Generational Equity LLC. This firm is based in Dallas, Texas and it is a global merger and acquisition intermediary firm that helps clients in the middle market in acquisitions, mergers, diversities and strategic growth. The mission of the firm is to release equity and generational wealth present in every business. He says that when you are dealing with mergers and acquisitions, it is important for you to keep the following points in mind-
- Assemble the team– It is important for you as a business to assemble the team. This internal team has to comprise of representatives from sales, marketing, finance and operations. In the above case, you may consider hiring external advisors that are experienced in the niche like valuation experts, investment bankers, lawyers and accountants. He further adds that for the effective acquisition of the company, it is important for professionals to constantly communicate with one another and resort to cohesive thinking. The CEO or any person appointed by the CEO should be able to define the authority and the responsibility of each of the team members.
- Beginning the target search– This team generally will decide on whether an investment banker will search and evaluate targets or would there be a deal flow that is generated on an internal process via networking, screening and other contacts in the industry. The investment banker is the professional that will have access to the valuable information and the resources of the company. He or she will be the expert that gives the company advice and counsel on the negotiation and valuation of the deal. After this stage, the CEO or the senior member of the team approaches the business owner with a compelling proposal as to why the two business entities are strategically for and would become financially strong if merged together. Here, he says that business owners have a upper hand as there is no competition. The price can be kept reasonable when you compare having an open auction for it.
- Creation of Plan-The reason, the objectives and the target companies- these factors come into consideration. There are certain additional points that you have to take into consideration when you are drafting out an acquisition plan. You need to draft out the target company evaluation, the timetable and the deal flows. The relevant industry too has to be taken into account. Along with this comes the cost savings.
John Binkley and his team of skilled professionals guide business owners on the above three basic merger and acquisition components and more. He says that his company organizes seminars and workshops for the business owners to attend so that knowledge and awareness is effectively spread. He also says that it is important for skilled specialists like him to be hired when the merger or the acquisition takes place!