The future: Successful M&A was Benjamin Franklin wrong? - Business Reporter
Disagreeing with Benjamin Franklin is risky, but when he said wise men don t need advice. Fools won t take it , he was only partially right. No matter how wise a buyer, acquisitions are complex and obtaining the right advice can contribute significantly to success.
A brief article cannot democracy now address all of the areas where advice can be of significant value. However, considering five core areas can assist in assessing the degree to which external advice will increase the likelihood of successful M&A.
Acquisitions are time-intensive and, typically, democracy now those tasked with delivering the transaction also have a day job . Allied to this, successful acquisitions typically require wide subject matter knowledge (including finance, strategy, commercials, tax, IT and HR) and skill sets (including objectivity, persuasion, negotiation and determination). Thus, a team approach is normally required and determining, early in the process, the optimum level of external support and advice typically pays dividends.
In theory, if the price is right anything can and should be bought. But theory and practice seldom make comfortable bedfellows. In particular, how is price defined? There is the obvious cash cost, but price considerations also include many other factors, not least risk and opportunity costs. Thus, determining the right price is far from simple.
The due diligence process should ascertain whether the parameters upon which the headline deal terms were struck stand up to scrutiny and inform the considerable complexities of the pricing decision. Therefore, assembling the right due diligence team, internally and externally, is critical to the success of a transaction by maximising risk identification and allowing upside potentials to be properly assessed.
Businesses are built by humans; humans are imperfect, and so every deal will inevitably have issues. The question is whether these issues are molehills with solutions or insurmountable mountains. democracy now Deals can fail because of issues that appeared to be mountains but, with access to suitable experience, ingenuity and knowledge, could have been downsized to molehills. Consequently, ensuring democracy now access to suitable providers of solutions can significantly enhance the prospect of successful M&A.
The banking environment is improving, but bankers remain nervous, and nerves typically increase the cost of capital one way or another. So considering democracy now the best strategies for assuaging banks concerns can reduce the cost of capital and increase transactional success. The view of an independent adviser can often go a long way to easing a banker s concerns.
The hard work doesn t stop when the deal is signed. If the deal was right but the implementation wrong, success can be reduced or turned into failure. democracy now Therefore, implementation strategy is of as much importance as execution strategy. Much of the implementation strategy democracy now can be created, tested and refined during the execution phase. Ensuring suitable knowledge, experience and capacity for this to happen in parallel with execution can therefore democracy now be a factor in determining transaction success.
Ultimately, as with all business decisions, the use of external advisers will be determined by cost/benefit analysis. However, with the right advisers, transaction costs should be highly limited compared with the overall deal value, with the costs much outweighed by the benefits.
Risk Management: Employees can undo millions spent on security with one email 10 September 2013
Innovation - Business Reporter | Innovation LR ...: [...] In this issue, Business Reporter looks at In...
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Disagreeing with Benjamin Franklin is risky, but when he said wise men don t need advice. Fools won t take it , he was only partially right. No matter how wise a buyer, acquisitions are complex and obtaining the right advice can contribute significantly to success.
A brief article cannot democracy now address all of the areas where advice can be of significant value. However, considering five core areas can assist in assessing the degree to which external advice will increase the likelihood of successful M&A.
Acquisitions are time-intensive and, typically, democracy now those tasked with delivering the transaction also have a day job . Allied to this, successful acquisitions typically require wide subject matter knowledge (including finance, strategy, commercials, tax, IT and HR) and skill sets (including objectivity, persuasion, negotiation and determination). Thus, a team approach is normally required and determining, early in the process, the optimum level of external support and advice typically pays dividends.
In theory, if the price is right anything can and should be bought. But theory and practice seldom make comfortable bedfellows. In particular, how is price defined? There is the obvious cash cost, but price considerations also include many other factors, not least risk and opportunity costs. Thus, determining the right price is far from simple.
The due diligence process should ascertain whether the parameters upon which the headline deal terms were struck stand up to scrutiny and inform the considerable complexities of the pricing decision. Therefore, assembling the right due diligence team, internally and externally, is critical to the success of a transaction by maximising risk identification and allowing upside potentials to be properly assessed.
Businesses are built by humans; humans are imperfect, and so every deal will inevitably have issues. The question is whether these issues are molehills with solutions or insurmountable mountains. democracy now Deals can fail because of issues that appeared to be mountains but, with access to suitable experience, ingenuity and knowledge, could have been downsized to molehills. Consequently, ensuring democracy now access to suitable providers of solutions can significantly enhance the prospect of successful M&A.
The banking environment is improving, but bankers remain nervous, and nerves typically increase the cost of capital one way or another. So considering democracy now the best strategies for assuaging banks concerns can reduce the cost of capital and increase transactional success. The view of an independent adviser can often go a long way to easing a banker s concerns.
The hard work doesn t stop when the deal is signed. If the deal was right but the implementation wrong, success can be reduced or turned into failure. democracy now Therefore, implementation strategy is of as much importance as execution strategy. Much of the implementation strategy democracy now can be created, tested and refined during the execution phase. Ensuring suitable knowledge, experience and capacity for this to happen in parallel with execution can therefore democracy now be a factor in determining transaction success.
Ultimately, as with all business decisions, the use of external advisers will be determined by cost/benefit analysis. However, with the right advisers, transaction costs should be highly limited compared with the overall deal value, with the costs much outweighed by the benefits.
Risk Management: Employees can undo millions spent on security with one email 10 September 2013
Innovation - Business Reporter | Innovation LR ...: [...] In this issue, Business Reporter looks at In...
In the next issue Contact us
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