In many cases, once the M&A advisor has finished doing his job, the entrepreneur is left to fend for himself. Often he gets so carried away by the daily issues that he loses track of matters that are crucial for the acquisition to succeed. Practice proves to be different than expected. Entrepreneurs will then start pioneering, or forget why certain matters have been arranged in a particular manner, which may result in conflicts with the other party. In that case, Diligence is the party par excellence to assist the entrepreneur in resolving such issues.
In some instances, these services can be provided after assistance has been given with regard to a business sale, especially if the previous owner stays on for a while.
After the sale
A business transfer is a radical moment in the life of a company, and the impact may be felt for some time. There will be a change in leadership: new management means a new style, method, and strategy, such as modernisation, expansion, or entering new markets. How will staff view the transfer? A new relationship and trust need to be developed, which will cost time, and sometimes this is a laborious process. In particular, MBI candidates − and to a lesser extent, MBO candidates − may get carried away and try to achieve too much, too soon. Calling in an experienced business coach can help to ensure that a business acquisition will also succeed in the long term, even after a difficult start.
Our services comprise:
lending an ear;
being a sparring partner for the new DMS;
assisting in the implementation of the post-acquisition plan;
being a soundboard relating to strategic issues and decisions;
maintaining a critical eye on finances;
following up on the business plan, and keeping it up to date;
offering support in meetings with financiers.
After a merger
If two companies seek to merge, they usually have great expectations concerning the desired synergy. However, the reality is often disappointing. Furthermore, a merger may have less attractive aspects, such as new owners having to adapt to each other, joint control, cultural change, and so on. The question as to why they have entered into the merger may soon arise, and so many issues may emerge that the parties decide to separate again. Then the merger has failed.
As well as providing after-sales services (see above), there are two additional focal areas where the Diligence M&A advisor may be of assistance:
Company culture is the most underestimated aspect of a merger, because every company has a culture of its own, to which staff members are loyal. This applies particularly when newcomers, who are not always welcome, enter the business. Integration therefore needs to be carefully addressed in order to prevent conflicts between ‘camps’. Long before the merger is effected, management needs to determine what culture is desired, and what will be needed to achieve this. There should be a clear plan as to how the culture is to be implemented, which then needs to be introduced and monitored.
Furthermore, the parties need to make clear in advance what they seek to achieve with the merger. These intentions should also be laid down in a business plan, which needs to be strictly implemented and monitored.