When is a Merger or Acquisition a “Success”?
Posted November 21, 2019 in Articles
Closing a merger or acquisition is a feat of endurance that requires careful planning, strategic negotiation and close attention to detail. For parties on both sides of the deal, getting to the finish line is the ultimate goal, but when can achieving this goal truly be considered a “success”?
When we advise clients in global M&A transactions, we judge the success of the deal based upon a variety of different factors. By addressing these factors during the negotiation process, we help our clients minimize uncertainty and extract maximum value – an end result that many would consider the true measure of success.
Achieving Success in Complex M&A Transactions
1. Comprehensive Resolution of Assets and Debts
For both buyers and sellers, ensuring that there are no lose ends is a key component of the due diligence and deal-making processes. This includes identifying all tangible and intangible assets that should be included with the deal, and ensuring that existing debts remain (or become) the responsibility of the appropriate party.
2. Overcoming Cultural Differences and Other Cross-Border Obstacles
Cultural differences can be a silent – and often significant – factor in cross-border M&A transactions. Understanding these differences is the first step toward overcoming them, and overcoming them can be essential to successfully closing the deal.
3. A Deal Structure that Facilitates Prompt Post-Closing Implementation
While closing a merger or acquisition is a major milestone, it is ultimately a means to a greater end. From integrating systems and operations after a merger to implementing across-the-board changes for an acquired entity, the structuring of a deal can significantly impact the timing and cost of post-closing matters.
4. Timely Execution of Contract Transfers
From managed services agreements to real estate leases, and from vendor agreements to client contracts, the transferability all relevant agreements should be confirmed before the deal closes.
5. Cost and Tax Mitigation
Overlooking issues and uncoordinated efforts can lead to unnecessary costs and tax liability. Mergers and acquisitions should be conducted and structured with these financial considerations in mind, and any significant cost-mitigation or tax-mitigation opportunities should be thoroughly explored.
6. Management of Litigation Risk and Potential Liability
For acquiring entities, ensuring that pre-existing claims will remain the liability of the seller is a fundamental (but crucial) aspect of mitigating litigation risk in M&A transactions. During the deal-making process, both parties should be conscious of issues that have the potential to lead to litigation, and any potential exposure should be addressed accordingly.
7. Satisfying Key Stakeholders
In the M&A context, no one likes surprises, and key stakeholders will often have different priorities and expectations. When conducting a transaction, it is important to ensure that all key stakeholders’ priorities are known, and any issues or limitations that may cause the deal to fall short of their expectations should be discussed and managed appropriately.
Mithras Investments | Consultants Experienced in Global M&A Transactions
Are you contemplating a merger or acquisition in the U.S. or abroad? If so, our consultants can help you make strategic decisions focused on achieving a successful outcome. For more information, call Mithras Investments at (305) 517-7911 or inquire online today.