In the financial press, articles about mergers and acquisitions that take place in SMEs and large corporations are published every day. While boosting revenue or gaining exposure to a new customer base are often the primary reasons for companies to enter into M&A, it is important to have a well-thought-out strategy to ensure that they succeed.

A successful M&A involves a complex process and the final outcome is contingent on a variety of factors that need to be taken into account by both parties. It is essential to have a top-quality management team in place to ensure that your company is able to successfully navigate the M&A process and create value. The presence of trusted external consultants and accountants who can aid in this process can also enhance the overall credibility of your M&A strategy.

The first step is to perform an in-depth review of the financial health of your business. This includes analyzing profit and loss statements and cash flow, as well as analyzing equity and debt of the company, and determining if you have enough cash flow to pursue a M&A transaction. The financial health check will reveal any ambiguities in your Management Accounts and Statutory Filed Accounts, which could create confusion for buyers.

Another important aspect is to take into consideration the costs of integrating both businesses. It can be physical costs like the merging of offices, systems and employees or human capital costs, such as calculating the costs of benefits and compensation programs. Getting human capital experts involved early in the process will help you assess the costs involved and incorporate them into your price negotiations for purchases.

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