The five key steps to prepare your M&A operation

November 2021

External growth is one of the quickest ways, for SMEs to grow its business and expand its operations (activities, services, clients) abroad. However, a Merger & Acquisition process faces many challenges, especially in an international context.
5 prerequisites are critical, before beginning your M&A project.

Integrate external growth to your development strategy
/
External VS Organic growth : define the best way to enter a new country, new market. External growth can be quicker in most cases but a preliminary analysis is mandatory before launching a full process. It can lead to value loss if not done correctly.
/ Verify your financing capacity (level of Enterprise Value) to assess the size of the target you can aim

Appoint a Project Manager
/ Name a Project Manager within your organization that will be the link between all
the parties involved (advisors, targets, banks, etc.) and that can
allocate a significant amount of time
/ Depending on the size of the project, define the scope of responsibilities of each relevant member involved in the project: decision-making process, role of each member, etc. Ex: CFO can be involved during the valuation phase but no need at the beginning, CLO can be involved for NDA, CEO to decide if a target is relevant

Define the ideal target
/
Define the company size (employee, revenue/EBITDA, balance sheet.)

/ Define the activity / services / products / sectors / clients
/ Define the geographical scope (region, country)
/ Define the other criteria (type of ownership, type of acquisition, type of clients, management team, etc.)

Adapt to cultural differences
/ In the first approach of the potential targets: the first approach is always complicated as we do not know if the targets are ready to sell their companies or open to share information. The idea is to create the opportunity. Each approach must adapt to cultural specificities to maximize the chances of opening the door and getting information
/ In the negotiation phase and the M&A process: adapting to cultural differences is key: respect the agenda / calendar, communicate clearly, do not rush and take the time to advance at the rhythm of the target
/ In the post-deal integration: must be prepared as it does not only concern top management / owners anymore but all the employees. Put in place a planning and a project manager to run properly the integration. Decide to change branding (depending on the market), decide to mutualize tools (IT, finance, HR, etc.).

Specify the schedule
/ Define the planning of the process for the main steps: duration of each step (2 months for the screening, 2 months for the approach phase, 4 months for Due Diligence, etc.). It’s mandatory to be structured and to advance step by step
/ Adapt to the agenda / calendar of each target (might be quicker than expected if the target is in an active
sale process / longer if the target is initially not ready to sell)

Infographie M&A V2 Part 2 EN

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