Identify synergies before proceeding
Consider the proposed structure of the acquisition.
Be confident that synergies is available so that 2+2=5.
Avoid diversification, as this rarely presents opportunities for synergy.
Ensure that apparent cost savings are deliverable and assess the financial implications.
Consult your internal teams to identify additional opportunities.
Don’t cut corners with due diligence
Commercial due diligence will often, but not always, be done by your own team.
Commission external market research where appropriate.
Accounting due diligence should be historic but also involve a detailed model of the combined business for the next two years, at least.
Legal due diligence should uncover any ‘skeletons in the cupboard’.
Don’t forget to include IT, IP, pensions, environment and similar areas.
Be meticulous with post-transaction integration
Prepare and implement a post-acquisition integration plan.
Don’t ignore the cultural sensitivities that invariably arise through business combinations.
Focus on management and financial information systems and improve them as a priority if needed.
Don’t underestimate the management time which may be required to deal with unexpected challenges.
Don’t run out of cash!