In a merger or acquisition, discord of company cultures and disparate systems can cause the demise of a once-promising partnership. About 70% of acquisitions fail when post-acquisition results don’t meet pre-closing expectations. Many of these M&A failures are caused by poorly executed integration.
What’s surprising is that M&A failures are avoidable with careful integration planning and strategic post merger integration. Pre-acquisition, it takes a lot of forethought on how company cultures might clash and how their systems will integrate. Post-acquisition, it takes a ton of strategic elbow grease to rapidly align systems (and eliminate some), retain productive employees, keep customers, and make stakeholders happy.
It seems like every company owner dreams of achieving major traction in the marketplace. That fast track growth, however, often comes at a cost. Things get taped together. There’s no process to speak of. Systems? Ha. Things go missing, including clients and team members. Lack of resources means that even the crown jewel, the company’s ability to out-innovate, may be put on hold just to keep up.
When a company grows faster than the capabilities of the leadership team, the end result is often a splat: the company hits the wall.
Smart fast-growing companies are combatting this with fractional or part-time executives.
According to a Harvard Business Review report, the failure rate for mergers and acquisitions sits between 70 and 90%. Even before the deal closes, it’s not uncommon for deals to unravel.
If the odds can be overwhelmingly negative, what can you do to increase your chance of success if you are looking to sell your business?
Don’t wait for the M&A process to begin to get your team in gear – that’s a sure fire way to fail.
Cash flow mismanagement is a common problem among small and mid-sized businesses. But many owners do not have the experience to precisely pinpoint where cash flow mismanagement has occurred, nor the background to develop plans designed to counter those cash flow issues.
Cash Flow Analysis and Financial Statements
A typical small or mid-sized business owner can spend hours examining his or her company’s financial statement, and nevertheless fail to see the underlying causes of cash flow problems, whether they be mismanagement of receivables, problems in pricing strategy, erosion of margins, escalating operational costs or other cash flow problems.