Mergers, acquisitions, and other corporate combinations can be a powerful way for Small to Mid-Sized (SMB) businesses to create more value and growth opportunities. The goal for many SMB’s is to double or even triple revenues on the way to returning many times their initial investments. However, despite these ambitious goals, many SMB’s fail to deliver the desired results. In fact, studies have shown that up to 90% of mergers and acquisitions fail to meet their intended objectives for SMB’s.
To fix this, SMB’s need a comprehensive and tailored playbook that outlines a clear strategy for success. This playbook should include the following key elements:
- Clearly defined goals and objectives: Before embarking on a merger or acquisition, SMB’s need to have a clear understanding of what they hope to achieve. This should include specific financial targets, such as revenue growth or cost savings, as well as strategic objectives, such as expanding into new markets or acquiring new technologies. SMB’s should also consider the potential impact of the merger or acquisition on their existing operations, as well as the potential for additional resources, such as personnel and equipment, to be required to support the new business.
- Thorough due diligence: Before making an offer, SMB’s should conduct thorough due diligence on the target company. This includes evaluating the target’s financials, management team, and operations. It also includes identifying potential risks and areas of concern. Due diligence process should be efficient and cover all the aspects of the target company like financials, legal, tax, regulatory, human resources, IT, operations, and culture. It is important to identify any hidden liabilities or issues that may arise after the acquisition.
- Integration plan: Companies should have a detailed plan for integrating the two companies after the merger or acquisition. This includes identifying key areas of overlap, such as products and services, as well as identifying areas of potential conflict, such as cultures or management styles. The integration plan should be comprehensive and cover all aspects of the merger or acquisition, including human resources, IT, operations, and culture. It should also include timelines and milestones to ensure that the integration process is on track. SMB’s should also consider the potential impact of the merger or acquisition on their existing customers, as well as the potential for new customers to be acquired through the merger or acquisition.
- Communication plan: SMB’s should have a clear communication plan that outlines how they will communicate with employees, customers, and stakeholders before, during, and after the merger or acquisition. This should include regular updates on progress, as well as a clear explanation of the benefits of the merger or acquisition. Communication plan should be designed to keep the stakeholders informed and engaged throughout the process. Clear and consistent communication will help to minimize confusion and uncertainty, and ensure that all stakeholders are on the same page.
- Focus on culture: SMB’s should focus on maintaining a positive and productive culture after the merger or acquisition. This includes encouraging open communication, fostering collaboration, and providing opportunities for employees to learn and grow. Culture is an essential element of a successful merger or acquisition, and SMB’s should take steps to ensure that the cultures of the two organizations are compatible. This can be achieved through effective communication, training, and employee engagement programs.
- Continuous evaluation and improvement: SMB’s should continuously evaluate the merger or acquisition and make adjustments as needed. This includes tracking progress towards goals, identifying areas that need improvement, and taking action to address any issues that arise. The process of continuous evaluation and improvement will help to ensure that the merger or acquisition is on track, and that any issues are identified and addressed in a timely manner.
- Cost-benefit analysis: SMB’s should conduct a cost-benefit analysis to determine the potential financial impact of the merger or acquisition. This includes evaluating the potential for revenue growth, cost savings, and other financial benefits, as well as the potential for additional costs, such as integration and transition costs. SMB’s should also consider the potential impact of the merger or acquisition on their existing operations, as well as the potential for additional resources, such as personnel and equipment, to be required to support the new business.
- Professional support: SMB’s should consider seeking professional support to help guide them through the merger or acquisition process. This includes hiring a merger and acquisition consultant to help with due diligence, integration planning, and other key aspects of the process. Additionally, SMB’s should also consider hiring legal and financial advisors to help with legal and financial aspects of the merger or acquisition.
By following this comprehensive and tailored playbook, SMB’s can increase their chances of success in mergers, acquisitions, and other corporate combinations. By clearly defining goals and objectives, conducting thorough due diligence, creating a detailed integration plan, communicating effectively, focusing on culture, conducting cost-benefit analysis, seeking professional support and continuously evaluating and improving their efforts, SMB’s can drive value for shareholders, employees and customers.
It’s important to note that every merger and acquisition is unique and requires a tailored approach, so a general approach or a one size fits all strategy may not be the best solution. Therefore, it’s crucial to adapt the above-mentioned steps to the specific needs and circumstances of the particular merger or acquisition.