One of the most trending topics in society today is the expansion of large organizations. Ever wonder how they manage to do so? Well, there are many ways an organization can grow; either by building new entities, acquiring existing businesses or partnering with other organizations. No matter how big or small a company is, there will always be changes that will happen sooner or later. Either they decide to expand the business or transfer the ownership of the company. Nonetheless, there are a lot of things to consider when dealing with Mergers and Acquisitions.
Mergers and Acquisitions will not be a success all the time. It is a big process and the transaction takes a lot of time to complete. There are many things to take on account, from the negotiation to the legal point of view of the transaction. But the trigger point of it is trust. It is the foundation of any Mergers and Acquisition, trusting that the entity being acquired will bring success to the organization; trusting that the one acquiring the business will make the business grow stronger.
Considering all of this, what are some of the things that one should consider upon trusting an M&A:
Will it bring value to you and the organization? M&A is like buying a designer bag or shoes. It is like buying something you need yet thinking whether it is worth it or not. It is more than that, but the principle is the same. Impulsive buyers are not allowed, that is why there are advisors that manage M&A. It takes a lot of planning and the decision is not easy to make. The organization needs to weigh whether it will be good for them or not.
How is the transaction going to be settled? The seller should know where the fund of the buyer is coming from. Whether it is through the company stock, via cash or through the bank, it is important because it will have a huge impact on the fate of the transaction. Both sides need to consider how the sellers get paid and how the buyers are going to pay.
What is the reason for selling? There will always be a ‘why’ in every transaction. The answer to that will determine whether the transaction is valuable. In M&A, there is always a reason why the organization decided to transfer or sell the company and there is a lot out there. Knowing what is behind the curtain will give the buyer a better view of what they are dealing with. It will also give them the assurance that it is a good choice for them.
Mentioned above is just the shell of what M&A is. It is very broad and critical to any industry. One should have a wide understanding of what it really is to be able to make the right choice and decision. It is about taking risks and trusting the people around you and the people who are going to surround you in the future. The core of M&A is much more complicated than what people see on the news. It might look like it is all about money or a trophy to some but for those who know it well, it is more than that. It is building connections, giving chance, taking risks and most of all trusting people.
