M&A is a viable method for companies to expand their geographical reach, gain an edge over competitors and gain access technology employees, assets or even employees. M&A is a long and complex process. Due diligence can take several months to determine the potential targets. This requires a thorough analysis of financial, commercial and operational information. The process can be even more difficult when a business is remote, since many of the same steps are needed for success, but there are additional challenges around communication and collaboration.
Preparing for Day 1
If a company is acquired it must establish the foundation for its first official day of operation (known as «Day 1» in M&A terminology). This includes establishing organizational structures, integrating back-office infrastructure and IT systems, as well as informing staff members on what the plan is for how things will be conducted in the future. The M&A team must also ensure that all necessary documents, including legal agreements as well as financial models, contracts and contracts are in place.
Building a shared Vision
A successful M&A strategy requires an understanding of the differences and similarities between the two parties – in terms of business goals and culture. This is especially crucial when two companies merge and buying remotely. An organization that isn’t equipped with a clear vision can lose its direction and create friction in the workplace.
M&A is a high-risk business that often has unintended consequences. The sunk cost fallacy, in particular can result in M&A decision makers into agreements that are based on the assumption that they will agree to an arrangement that is worse than the best alternative.