Every merger has its challenges. As you work to put together a merger, whether you’re on the buying or selling end of the transaction, you may face financial, legal, and logistical obstacles that you will need to overcome.
At NorthStar Venture Partners, we have been on both sides of the negotiating table. That means we have a broad understanding of merger strategies. We put our knowledge to work on behalf of our clients every day.
If you’re considering a merger, you should be thinking about merger strategies before you get to the negotiating stage. Here are 5 types of merger strategies that you can use to ensure your next merger is successful.
#1: Gather Key Information
Anybody considering a merger knows that due diligence is essential to a successful deal. However, you can do more with the due diligence phase than simply determining the financial and operational status of a company.
The due diligence process is an ideal time to gather information that will be useful to both the negotiation of a deal and to the merger transition. The more data you have, the easier it will be to map out your day-one plan as well as a long-term integration plan.
The information you gather should include:
- A full process review
- Regulatory and organizational requirements
- Key elements for phase one implementation
Going into due diligence with your transition in mind is one of the best merger strategies. You’ll save time and money if you gather information as early as possible.
#2: Identify Desired Results
The second merger strategy you should consider is a results-focused strategy. When one company acquires another, it is nearly always with the goal of increasing profits and growth. A well-thought-out strategy is one that drills into the specifics.
Instead of focusing on broad goals, it may be helpful to think about the big-picture first. For example, a merger done with the goal of market expansion in mind could identify a result that isn’t specifically about money, such as customer satisfaction scores or repeat sales.
Target performance indicators may be both internal and external. Employee retention could be a desired outcome as could cost cutting. By putting some thought into what you want from the merger, you can do a better job of setting goals and achieving the results you want.
#3: Map Out an Integration Plan
You wouldn’t start a new company without a plan and you shouldn’t go into a merger without one, either. Early planning -- aided by the information you gathered in due diligence and your identification of key results -- will minimize stumbles in the early days of the merger and go a long way toward guaranteeing your success.
Your plan should include:
- Day one action items
- A game plan for the first 100 days
- Long-term goals broken down into action items
Your merger integration plan should be as comprehensive as possible. As a merger strategy, planning will help to eliminate (some) guesswork and get employees on board quickly. Both are necessary if you want your merger to be successful.
#4: Create a Positive Company Culture
A big part of merger success is employee engagement. If employees are on board with the merger, feeling that their opinions and concerns are being addressed, then the likelihood is high that the merger will be a successful one.
You can create a culture of success by:
- Involving stakeholders on both sides of the merger in strategic conversations and planning to ensure that all voices are heard.
- Working to create a new shared identity for the merged entity where all employees feel that they are part of the merged company and understand their roles.
- Communicating clearly with stakeholders at every level to ensure that there are no misunderstandings.
- Creating a company mission and vision for the future.
Getting all involved parties on board with your merger is an essential strategy for success.
#5: Review Progress and Embrace Accountability
The fifth and final merger strategy you should know about involves placing a high degree of importance on progress and accountability. When something isn’t working, you must learn about it quickly and take action to remedy the situation.
We already talked about identifying the desired results of your merger. The key second element to identifying results is tracking them. By choosing KPIs and milestones and monitoring them closely, you’ll be able to avoid the pitfalls that can sink even a well-thought-out merger.
At the same time, you’ll need to ensure that every stakeholder understands the importance of accountability. We all make mistakes and accepting responsibility for them is the best way to correct them and move forward.
Before you undertake any merger, you should identify the strategies that will help you to achieve your goals. The five merger strategies outlined here are some of the best we know to ensure a successful merger.
Do you need help planning and executing your merger? Click here to book a call with NorthStar Venture Partners today.