Best Practices to Streamline the M&A Processes

Mergers and acquisitions have already become commonplace in business; such transactions are made by both global companies and small local ones. Take a look at the best practices to streamline the M&A processes.

The Procedure for Performing the M&A Processes

The M&A sector of the economy around the world has been undergoing significant changes in recent decades, characterized by the globalization of financial markets, the consolidation of the financial sector, which is reflected in the reduction in the number of financial institutions, the expansion of the business of banks, which is expressed in the internationalization of business and the diversification of the product range, including the expansion of the offer of non-banking products by banks, products and services. Deregulation and changes in tax laws in many countries have a great impact on the financial sector.

The procedure for the merger of two organizations is a completely non-trivial process, which is quite difficult even in countries with well-established business and financial traditions and cultural environments. Suffice it to say that according to McKinsey, up to 60% of M&A transactions in the Western market are unsuccessful. Moreover, the main sources of failure, as a rule, are not the wrong choice of an object for acquisition or the structuring of a transaction. The main sources of failures, shortfalls in profits, and direct losses are mistakes made after the transaction at the stage of the merger (integration) of two businesses.

The problem of effective business development is one of the most important tasks that managers and owners face in the process of managing a company. One of the methods for the development of companies in various sectors of the economy, including the banking sector, is mergers and acquisitions. As a result of the merger transaction, the corporate structure of the company, the scope of the main activity, and the key parameters of the organization’s activities may change. Such transactions are part of a single vector of the company’s development, and meet the set strategic goals, which in turn can be motives for the integration and restructuring of corporate banking structures.

Which Are the Best Practices to Streamline the M&A Processes?

Mergers and acquisitions are the same purchase and sale processes; only the object here is control over the company’s property. According to the theory, mergers and acquisitions contribute to greater efficiency of the company due to the fact that the new owner considers the amount paid to be lower than the real one and plans to get more profit than the previous owner by integrating the company into its production and financial chain and implementing various kinds of synergies. This positive effect can be realized and is being realized in the national economy.

What is the purpose of mergers and acquisitions? First of all, in order to increase the value of the company, as well as its profitability in the short and medium-term. Among the best practices to streamline the data room processes are:

  • penetration into new markets (segments);
  • savings – cost reduction (research and development of purchased products/services);
  • identification and analysis of the main problems arising in the process of mergers/acquisitions;
  • suggesting ways to solve them and structuring the key factors for mergers/acquisitions that need to be paid attention to in order to increase the likelihood of success;
  • compiling a list of factors that positively affect the success of the transaction (success factors) ranked by importance.
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