David Anderson, Partner at Crowe Clark Whitehill, the national audit, tax and business advisory firm with offices in Cheltenham, advises on making your next acquisition a success.
With a revival in corporate activity on the horizon, the sound advice of one of my former clients comes to mind. He once said that a successful acquisition focuses on 'winning the peace following the transaction', rather than 'winning the war during the transaction'. I'm sure this sentiment rings true for all those who have ever been involved in an acquisition.
I read recently that between 70 and 90 per cent of all mergers and acquisitions are doomed to failure. With this in mind, what can be done to minimise the risk of failure and improve the chances of making your next acquisition a success?
The first and most important step is to analyse and understand the reasoning behind the acquisition. What is the motivation for the deal? Is the business looking to acquire additional resources or is it looking for a different business model?
Once you have the answered these questions - which are deceptively simple and yet worth the effort - you can assess potential targets and develop a plan for executing the deal.
Due diligence will of course feature as part of this plan, but aside from the usual legal, financial and tax aspects, a few other matters are worth considering.
If you have a "one-stop shop" rationale and the motivation for the deal is to expand your product range, ask yourself whether new customers will need or want to buy these products at the same time and in the same place. Do your sales staff have the necessary skills to sell the acquired company's products and, of course, vice versa. Finally, be honest about who has the stronger personal skill sets. Within people businesses, such as professional practices, in my experience an attitude of 'acquirer' and 'acquiree' rarely adds value.
The two main deal drivers are the pursuit of additional resources or a new business model. Targeting resources propels most M&A activity by professional practices. Resources and business models are very different and will require a fundamentally different approach post-acquisition. I would recommend the following integration strategies post-deal: If your objective is to acquire resources, integrate them quickly into your existing business and then let the former business 'die'.
Alternatively, if your plan is to acquire a new business model, try not to interfere too much, although make sure to add your own resources and expertise to learn and exploit the advances it brings.
When acquiring resources, such as professional practices, you run the risk that very little time and effort is actually spent on executing an integration plan. People will always need to understand the rationale behind the deal and feel part of it - quickly. A mobile resource can just as easily walk away.
In the case of a new business model, a significant amount of time and effort should be spent on dissecting the product as well as processes and systems. Look at what can be learnt and applied to your existing model as well as the problems that they have encountered and overcome. Real value can be unlocked by this careful investigation. Where such acquisitions can go wrong is the temptation to assume that the acquirer's processes are the best.
Speaking after the game, Charlie Sharples described it as 'the win that has eluded us.' The winger stressed that Gloucester had stayed positive after the first couple of weeks of the Aviva Premiership season and the 26-13 victory over Sale was a result of that focus.
Gloucester Rugby picked up their first win of the new Aviva Premiership season on Friday night, easing to a 26-13 win on the road at Sale Sharks. Director of Rugby David Humphreys was full of praise for his players on the night.
Defence Coach Jonny Bell was on media duties ahead of the Aviva Premiership fixture at Sale Sharks on Friday evening, and spoke about where Gloucester find themselves in terms of their form at the moment as well as how he's viewing their defensive displays so far.
Callum Braley, who skippered Gloucester United to a 22-19 Aviva Premiership A League win over Saracens Storm on Monday evening, paid tribute to his forwards and the younger players in what he described as not the prettiest of wins.
Tickets for Saturday's Aviva Premiership game against Bath Rugby in both the Stowford Press Terrace and also The Shed are now in short supply, although a number of returns from the visitors have just gone back on sale.
A desperately disappointing afternoon for Gloucester who, despite dominating possession and territory, were guilty of failing to make the most of it against a resolute Newcastle defence before the visitors pounced to snatch the win in the second half.