Mergers and Acquisitions

Hand drawing a flowchart diagramIt is a fact that most business acquisitions and mergers fail! Management desires the gains that consolidation and economies of scale should bring, but the majority of mergers and acquisitions across all industries do not live up to their potential. On paper, two plus two should equal four. In reality, two plus two usually equals three. This has been shown by dozens of studies covering hundreds of companies.

Why do most M&As fail?

Mergers and acquisitions fail for a variety of reasons. First a deal can fail because it wasn’t a good idea to begin with. Some executives focus too much on the idea of growth for its own sake. The business culture and profit motive may discourage internal managers and external agents from pointing out potential pitfalls, and pursuit of the deal can move forward without any serious challenge.

Second is the failure to manage the human or cultural integration. Businesses are more than financial reports — they include people, who have uncertainties, self-interests and personal needs. Many acquisitions proceed with minimal effort to integrate the people aspects of the businesses into the process. When this happens, it’s no wonder they fail.

In every step of the mergers and acquisitions process, we at LuAnn Capital pay attention to our clients needs. We listen. We respond. We’re more accessible to our clients than larger companies, whether the issue is small-business valuations, small-business marketing tips, exit strategies or other aspects involved in the process of selling a company.

The Process

Preliminary Stages

  • Face-to-face meeting to understand your company’s culture, management, strategy and goals
  • Perform full business valuation to determine your company’s fair market range of value
  • Timing is important in the sale of your business. We assess the best time to go to the market or determine if waiting will serve your interests.

Marketing

  • Develop and implement a unique marketing strategy for your company
  • Conduct searches to identify potential buyers with financial means to complete the sale
  • Confidential Business Review with detailed information about your business, is created (and approved by you) for review by potential clients
  • Contact potential buyers to sign a Confidentiality Agreement (CA) and verify their financial viability

Offer Stage

  • Create a time frame in which offers must be made
  • Discuss details with potential buyers
  • Provide potential buyers with information regarding Letter of Intent
  • Reach final agreement in a non-binding Letter of Intent
  • Negotiate Details

Between Offer and Closing

  • Follow a due diligence process
  • Prepare legal documents with outside legal support
  • Set a final closing date with the approval of all parties

Closing and Post-Closing

  • Attend closing at escrow to ensure all necessary final documents are in good order
  • Work with the post-closing documents, including non-compete and consulting forms