When preparing for a corporate merger and acquisition, it’s important to consider who needs to know information about the transaction. This can include employees, channel partners, customers and media.
Many employees will be concerned about their place in the new company. Providing an org chart that will help employees understand how they will fit into the new structure can help ease their fears.
Identify Key Stakeholders
Whether your company is considering a merger and acquisition or you are already in the middle of one, it is important to identify and communicate with key stakeholders throughout the process. This includes internal teams, but it should also include external stakeholders like investors and customers. Keeping these groups updated about the M&A can help mitigate any potential concerns or issues that may arise during or after the acquisition.
It is not only important to understand who the key stakeholders are for a corporate M&A, but it is equally important to know what their roles and responsibilities are in the M&A process, something also advised by law experts like Tom Goodhead. This will ensure that all necessary steps are taken to prepare for a successful sale and that the necessary documentation is collected. For example, it is essential to take a close look at your company’s financials, and this goes beyond just revenue and profit. It is essential to understand your liabilities and assets as well, as this will be an important factor for potential buyers.
Another critical aspect of M&A preparation is to build a data room and ensure all documents are electronically stored securely and easily accessible to ease the due diligence process for potential buyers. It is also important to track important information such as change of control provisions in vendor contracts and customer contracts. It is also essential to take a close look at your product marketplace and market trends, as this will be an important factor for buyers to consider when evaluating the potential value of your company.
Once you have completed the above preparations, it is time to start the process of identifying and communicating with potential buyers. This will require a thorough evaluation of your company’s financials, operational structures, management team, and customer base. A thorough assessment will allow you to identify any potential weaknesses or areas of improvement that could impact the success of an M&A and will help you determine the right valuation for your company.
Once you have a list of potential buyers, you will need to send a letter of intent (LOI) out to them to express interest in your company. You will then need to evaluate and negotiate with each buyer until you reach a final agreement.
Create a Communication Plan
The M&A process is a complicated and time-consuming endeavor that requires a lot of work. It involves preparing and reviewing historical financial information, building 2-3 year projections and modeling various growth scenarios in consideration of market variables. These preparations are critical to ensure a deal closes smoothly.
As the transaction gets closer, you will need to create a communication plan that outlines how you will communicate with both internal and external stakeholders. This will include employees, investors, vendors and customers. It will also include a detailed cultural integration plan. This is one of the most critical aspects of a successful acquisition. If the two cultures do not meld well, it can stifle productivity and cause frustration for employees. The communications team should work with HR and leadership to identify the key values that are a priority and how they will be incorporated into the new company culture.
In addition to a comprehensive communication plan, you will need to provide your teams with tools that they can use. This can include a communication dashboard for managers, core slides to support their team meetings and FAQs. You may even consider incorporating leadership communications training to educate leaders on how they can best articulate and share information about the acquisition. This can help them be a resource for their teams and avoid the need to handle issues that could arise from miscommunications.
It is important to determine the trigger points that you will use to inform your teams about the upcoming merger. This will vary by organization and may be dependent on the final terms of the acquisition. However, a good trigger point can be a milestone event like the contract signing or an event that can be shared with both organizations. It is also a good idea to develop a timeline of milestone events and include a communications plan for each.
Ensure your team is prepared by developing an org chart for the combined entity that includes both companies. This will allow you to identify where people will be moved and what the new job descriptions will look like. It will also help you determine whether there are any overlaps that should be avoided. This will save you a lot of headaches down the road.
Conduct Due Diligence
Due diligence is an investigation that must take place before any transaction takes place. It includes a thorough examination of the company’s financial records and future projections to assess the viability of the acquisition. This analysis helps the parties determine the appropriate purchase price and structure of the deal. It also allows them to identify potential risks and liabilities that would not have been known otherwise.
Conducting M&A due diligence requires a team of people with the right mix of skills. Some members of the team may be experienced attorneys or CPAs who can review contracts, check accounting irregularities and verify the accuracy of financial statements. Other team members may include business analysts and consultants who can provide a more comprehensive evaluation of the company. It is crucial that the team stays organized and efficient to ensure the process runs smoothly.
The process of conducting M&A due diligence varies by transaction, but there are some steps that are common to all deals. It’s important to have an efficient M&A due diligence process in place that enables you to meet regulatory requirements and close the deal quickly.
It’s critical to understand the company’s reputation in the industry, its customer base and supplier relationships. The company’s culture and work environment should also be analyzed. Having a watertight M&A due diligence process will help to prevent any surprises that could jeopardize the deal’s success.
Other important aspects of M&A due diligence include assessing the quality and condition of a company’s assets. This includes reviewing property and equipment and determining whether it’s a good fit for the buyer’s corporate infrastructure. It’s also important to look at the company’s human resources, including employee compensation, demographics and skill sets. This will help the M&A team determine the effect of the acquisition on existing human capital and evaluate any pending or historical employment-related litigation.
Finally, the M&A team should review a company’s legal documents and assess the risks associated with any litigation. It’s also important to review the company’s compliance with regulatory and environmental issues. This can be a crucial step in ensuring the M&A will be successful and avoid any legal complications down the road.
Ensure a Smooth Closing
As closing approaches, both parties experience a range of emotions. This is understandable. There are so many critical details to juggle during this process, from ensuring historical financial information is accurate and complete to building detailed 2-3 year projections that take into account market impact and growth.
It’s also important to consider the needs of your investors, clients and other stakeholders in your business. They too will be affected by the M&A and deserve to have open lines of communication regarding their rights to continued dividends, services and more. This may require drafting a number of compliance certifications and filings with various regulatory bodies that need to be completed in order for the transaction to close.
Another key consideration is determining what the new corporate identity will be and planning the integration process. This is a significant aspect of the M&A and one that must be carefully considered, as it’s not always practical to maintain both companies’ identities. Creating a clear plan early on is essential to easing employee fears and ensuring a smooth transition post-closing.
In addition, there are a number of other important steps to be taken prior to closing including establishing the strategic intent that will guide the sale and negotiating with those still interested in pursuing a deal. By this time, most interested buyers will have submitted their LOIs, which you’ll need to review and negotiate with in order to select a final buyer.
Once a final buyer is selected, the next phase in preparing for a M&A is to start the integration process. This will involve a great deal of planning on all fronts, from finances to organizational structure and more, so it’s important to get started sooner rather than later.
M&As aren’t the type of transactions that can be rushed or left to chance. It takes meticulous planning and an experienced legal team to ensure that the process is as seamless as possible.