Common Pitfalls/Issues/Challenges Of Mergers & Acquisitions(Part 4 of 4)

May 19th, 2009 Comments off
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Experts have advocated the failure rate of M& A is #90%. They further suggested that when M&A as part of business strategy to grow need to address the following issues/challenges:

PITFALLS/ISSUES/CHALLENGES OF PERFORMING AN M& A EXERCISE
                                

PRE-DEAL PLANNING STAGE

Potential Pitfalls

·         Incompatible marketing system

·         Did not anticipate forseeable event

·         Need to spin off or liquidate too much

·         Incompatible culture

 

Key Areas to focus on to Prevent failures
      

  • Formulating strategy
  • Developing the business case
  • Reviewing alternative options
  • Identifying  targets
  • Initial assessment

DOING THE DEAL: EXECUTION STAGE

Potential Pitfalls

 

·         Acquirer paid too much

·         Synergy non-existent or overestimated

·         Acquired firm too unhealthy

 

Key Areas to focus on to Prevent failures

   

·         Evaluating the target

·         Structuring the transaction

·         Price assessment

·         Supporting negotiations

·         Due diligence

·         Regulatory approvals

POST-MERGER INTEGRATION

Potential Pitfalls

·         Inability to manage target

·         Unable to implement change

·         Clash of management styles/egos

 

Key Areas to focus on to Prevent failures



·         Establishing the strategic framework

·         Developing integration plans

·         Communications

·         Implementing plans

·         Establish key performance metric in the form of a balanced scorecard

See other articles on:                                                                         Justifications of Mergers & Acquisitions(M&A), Difference between a Merger & An Acquisition, Different types of M& A

 

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