Many small business owners tend to have a bit of a maverick personality. Their bold vision and indomitable drive are the building blocks of entrepreneurial success.
When success comes, however, you will no longer be the “lone wolf.” Positive results will undoubtedly attract the attention of others, with merger and acquisition (M&A) overtures likely to follow. Whether it's a larger company looking to buy you out or an industry rival looking to join forces, keep reading as we explore how small businesses can prepare for M&A success.
Understand the Importance of Strategic Planning
Even if an M&A is not imminent, it is crucial to start planning early. If you only begin contemplating a M&A the moment an opportunity presents itself, it is likely too late to maximize value through the deal. Through proactive, strategic planning, you can:
- Hone in on deals that align with long-term goals.
- Identify potential synergies.
- Mitigate risks.
- Make your own breaks.
By thoroughly doing your homework and positioning yourself to act when an opportunity arises, you put your business in the best position to enter a profitable deal.
Partner with Valuation Professionals
Finding your niche is one of the keys to business success.
While being a jack-of-all-trades seems like a great idea on paper, too many small businesses that try to do too much, too soon learn a quick and painful lesson on the perils of spreading resources too thin.
Therefore, unless your company is in the business valuation field, it is a great idea to enlist the services of an M&A broker to help guide you through the transition.
M&A advisors specialize in quarterbacking businesses through complex transactions. In addition to connecting potential buyers and sellers, they also play a crucial role in strategic guidance, financial structuring, and business valuation. Each of these factors are critical components in guaranteeing that an M&A ends up profitable.
Ensure Elite Financial and Operational Readiness
Streamlining operations is vital to M&A success. If it will take a major investment of time and financial resources to realize synergies and establish profitable SOAs, then an M&A is best left alone.
In the current business landscape, this often involves the seamless integration of software and data. As such, it is a great idea to use a Dynamics NAV partner to optimize the new company’s ERP and streamline financial management of the M&A.
Typically fully integrated in 3 to 9 months, an on-site or cloud-based ERP can simplify financial tracking, optimize inventory and supply chain management, and leverage AI insights for more accurate business forecasting.
Cover All Legal and Compliance Bases
Before an M&A deal can close successfully, there are several legal and compliance hurdles that must be addressed early and thoroughly. This includes conducting due diligence to uncover any red flags—such as financial inconsistencies, risky contracts, pending litigation, or regulatory violations—that could impact the value or feasibility of the deal.
Regulatory compliance is another key step, especially in cases involving potential antitrust issues or industry-specific regulations. Depending on the sector, special licenses, permits, or approvals may be needed before moving forward.
Contract review is also critical—understanding existing obligations, required consents, and the implications of terminating or inheriting contracts can make or break a transaction.
Equally important is protecting your personal and business assets throughout the process. An asset protection attorney can help structure the deal to minimize liability exposure, ensure ownership structures are legally insulated, and safeguard intellectual property and other high-value assets. Their guidance can be especially valuable in identifying risks that might not be apparent during traditional due diligence.
Additional legal considerations include labor law compliance during transitions, as well as staying proactive about potential tax implications. Addressing all of these elements ahead of time will position the deal—and the new business entity—for lasting success.
Realize That an M&A Is Just the Beginning
It may feel counterintuitive, but closing on an M&A is more of a commencement than a culmination. What happens after the deal takes place ultimately determines how the transaction is scored. There are countless stories of “perfect marriages” that quickly turned into disasters due to poor planning for post-merger success.
Therefore, take intentional steps to guarantee that momentum only increases after the deal closes. Make sure that the cultures of the separate companies seamlessly mesh into a single, harmonious entity. Give top talent no reason to view themselves working anywhere else through proactive communication and team building. Achieve ongoing business continuity and position the company for long-term financial success.
Prepare for Every Eventuality to Guarantee M&A Success
Success draws attention. In the world of small business, this often means M&A overtures from rivals looking to piggyback off your success. By following the guidelines listed above, you can put yourself in the best position for M&A success when that day comes.
For more of the latest trends in business, explore the M&A resources at Fundz for the leading insights in the industry!
