In the financial press, articles about mergers and acquisitions in SMEs and large corporations are published each day. While increasing revenue and getting exposure to new clients are usually the main reasons behind these deals, it is vital that any business wishing to enter the M&A game has a well thought out strategy to ensure the success of a deal.

A successful M&A involves a complex procedure and the end result is dependent upon many factors that have to be considered by both parties. A top-quality management team is essential to ensure that your business can successfully navigate the M&A process. A trusted external consultant and accountants to help in this process can also enhance the overall credibility of your M&A strategy.

The first step of the process is to perform a thorough financial health check on your company. This involves analyzing profit and loss statements, assessing cash flow and debt/equity ratios and to determine if you have the liquidity to pursue an M&A deal. The financial health check will identify any differences between your Management Accounts and Statutory filed accounts, which could cause confusion for a buyer.

The cost of integrating both companies is a different aspect. This can include physical costs such as the merging of offices, systems and employees; or it could be in terms of human capital costs, such as the calculation of the costs of benefit and compensation programs. By involving human capital experts early in the process, you will be able to precisely assess the costs and include them in the price negotiations for your purchase.