Published on JD Supra on September 6, 2017
The Internet is jammed with articles reporting that most merger and [acquisition activity fails, and yet each year companies large and small continue to engage in the practice with the hopes that bringing onboard this particular piece of technology or that line of business will be the holy grail of their own success story.
One theory why mergers often fail is that process of acquiring a company: seeking the appropriate target, the due diligence process, and the merger negotiations are often led by a team of people who will have little to do with the target entity post-acquisition. Once the purchase agreement is signed or closed, like a swat team, they move on to the next deal. This team of corporate development executives are laser-focused on finding acquisition targets that meet a specific business need, such as a key piece of IP, a core group of personnel with specialized skills, a customer footprint or line of business in a coveted geography – in order to push forward the overall company goals and remain competitive in the industry.
Another factor in failed acquisitions is timing. The acquisition/merger process is often fast-moving, necessarily limited to a small number of senior executives, and highly focused on making a strong business case for why this particular target should be acquired. The driver here is often on promised future revenue potential of the combined entity, with little to no focus on what happens after the acquisition is completed.
If we take the reports at face value that many if not most acquisition activity does fail, can post-merger integration (PMI) be one tool to turn around a failed buy? This series of brief articles demonstrates that at any stage the legal group is engaged, there are steps that can be taken to make a successful integration.
It’s the call no one in your legal group wants to get – too sensitive even for an email – and the voice at the other end delivers the news: We’re looking to acquire a certain company and we need you to help us issue spot and prepare for the acquisition. Now what? Here are three points to bear in mind when asked to participate in a potential acquisition.
Taking a few small steps like these three can help you get out in front of the potentially large work flow that may come your way if the acquisition of the target entity proceeds and you are asked to help with planning for integration and integration implementation. Remember to think like a business operator and not get too lost in potential legal issues while leadership makes strategic determinations about whether or not to pursue a given target; study the due diligence report for as much basic information about the contemplated deal as possible; be mature and discreet in your communications to show your ability to treat ultra-sensitive, potentially market-moving information, confidential. All of these skills will serve you well, especially if you are called in to assist with the actual implementation planning if the acquisition proceeds.