Mergers and acquisitions (M&A) can be stressful, no matter how big or small your business is. So, let’s take a look at a few ways to prepare in advance so that the M&A process can be as streamlined as possible.
Time It Right
There is no ‘one size fits all’ approach to knowing when the best time is to sell your business. There are many factors to consider, whether it is personal preferences, industry-related, or the state of the market. At a more relatable level, this is similar to weighing up one’s options in a game of chance such as in iGaming scenarios. When iGaming enthusiasts try their hand at a game like the Aviator slot the multiplier gradually increases as the plane flies higher. The plane can fly away at any random time, so timing the ‘cashing out’ process right is the difference between small and big wins. In order to do so, Aviator features live statistics on the screen to allow players to keep track of the win board.
Similarly, businesses need to consider the success and maturity of the business. Is it still on an upwards trajectory, or has it plateaued? If the latter, M&A may be more desirable. In addition, does it feel like the right time for you to sell on a personal level? Perhaps you’re getting ready to retire or are looking to fly away to new opportunities, in which case M&A can allow you to move on. And, you’ll also want to keep an eye on live statistics depicting current market trends. Selling at a time when the market is favorable and opportunities are increasing can indicate a potentially higher ROI.
Improve Efficiency
If you’re looking to be an attractive prospect for a potential buyer, having a strong cash flow is essential. In addition, a good, reliable cash flow is also a key consideration for any merger. This is arguably more important for SMEs, as statistics from Business.com highlight that 44% of startups and 82% of SMEs fail due to cash flow issues.
With this in mind, you’re going to want to get your cash flow sorted in advance of starting M&A prospecting. This may involve improving the cost efficiency of operations by cutting costs in areas of the business that will not negatively affect overall revenue or profit.
Ensure Everything is in Order
According to data collated by Investopedia, 70-90% of acquisitions fail, and additional studies have found that only 30-40% of those put up for sale actually sell. Some of the key reasons behind this include issues with integration, misvaluation, and lack of information being available to the purchaser. With this in mind, it is crucial to get all paperwork, documentation, strategies, and plans organized before dipping your toes into the waters of the M&A process.
This includes everything from your financial records, to sales statements, and identifying key players within your team. The information should be collated in one place, and organized in a way that is easy to access and navigate. This not only allows businesses to easily identify all the information that potential buyers will want to know, but it keeps all stakeholders in the know, and can also assist in making the M&A process as smooth as possible.
As you can see, preparing in advance is key for an effective M&A process. With these tips in mind, you can put measures in place to streamline the takeover.