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Mergers and Acquisitions: A plan for prosperity and due diligence

You know a good deal when you see one. That doesn’t mean, however, that your good deal is profitable once it is acquired or merged with another. Marrying two entities, acquiring a new company, or dissolving an operation altogether requires a game plan, and a great deal of due diligence for success and to limit the exposure each member of the team and employee feels in the wake. Here are 3 things your merger and acquisition plan must investigate before everyone contacts the lawyers to make a deal.

1.   Who owns what?

You are getting more than the company. Your company is acquiring minds, patents, technology, and more. Who owns it, and what do you absorb or purchase when the merger or acquisition is complete? You and your team must do the appropriate research to answer the following questions:

  • Is the intellectual property yours, or does the employee, contractor, or consultant get to leave with it? To what extent does the company own the intellectual property? Will you own designs, research, agreements, or assignments, just tools and, materials, and resulting projects? Who maintains the rights and designs – if any – once the company is no longer? What are the rights the employee, former employee, owner, and/ or consultant have to the intellectual property after all is settled?
  • Do you own the branding, images, slogans, sites, and other relevant trademarked and copyrighted materials?
  • Does the company you are acquiring; or with which you are merging, require any domestic of foreign patents?
  • What is the company’s rights to the items on the technological devices, the technology used to conduct business, and future technology in the works? This is also true for important data, cloud services, and software.

2.   Where are the customers and clients?

If you want to thrive and survive mergers and acquisitions, you have to make sure the current book of business is on board and ready for the change. You must know everything about the current clientele to better serve their needs and to retain most of them through the process. It is possible when you ask:

  • Who they are and where do they come from.
  • What was their current experience – good or bad – with the initial company.
  • Does the business have issues generating and retaining clients? If so, what are they?
  • Does your target audience and demographic expectation coincide or conflict with the current book of business?
  • Will you deploy a new team to reach out to customers individually, or will you hire a firm? If you decide to use the current salesforce to contact familiar customers and clients, how do you plan to compensate them?

3.   What is the true financial cost of the project?

Finally, once you explore more than the outward facing numbers, you can dive into the financial commitment and cost of the merger or acquisition. You need to understand current contracts, financial obligations, vendors, suppliers, and technological costs, in addition to the price of the transaction. To get a better understanding of the dollars and cents of it all, ask the following:

  • Where and with whom are all the contracts?
  • What financial burdens or obligations is the current company under?
  • How much are you on the hook for new systems, product and software leasing, consulting services, insurance, and settlement agreements?
  • Will you keep, replace, or thin out the existing employees and contractors? If they go, what are the savings? If they stay, what are the expectations for changes in salary and benefits?
  • How much real estate is involved, where is it, and what are the balances?
  • Are there other agreements for which the company is responsible?
  • Is the company currently under audit? If not, when was the last and what were the results?
  • What is the health of current assets and debts?

Finally, one last point about the buy, you need to know if it is the right cultural fit and a profitable one. Most unsuccessful mergers and acquisitions are due to a poorly designed and executed integration process after the sale.

Find out how I can help you succeed in your company exit strategy with my M&A and Integration consulting services. Whether you want to maximize your sale price during an exit strategy or maximize your business growth and ROI through acquisition and integration, I can help.

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About the Author

Erick Simpson's picture

A Technology Businesses and Channel Growth and Transformation Consultant | Business Process Improvement, M&A and Integration Expert

Co-Founder of one of the first "Pure Play" MSPs in the industry, and creator of the MSP Mastered™ Methodology for Managed Services business performance improvement and the Vendor Channel Maturity Level Index™ that identifies IT channel program maturation for strategic growth, Erick Simpson is a strategic technology business growth and transformation specialist. He is experienced in improving top and bottom-line business performance by increasing operational efficiencies, boosting marketing and lead generation outcomes, accelerating sales velocity, shortening sales cycles and maximizing service efficiencies.

With over 30 years of experience in the IT industry as an Enterprise CIO, MSP, Strategic Coach and Consultant, Erick is a Business Process Improvement Expert with hundreds of successful IT Solution Provider, MSP, Cloud and Security practice business improvement consulting engagement outcomes.

One of the most prolific, recognized and sought-after  business improvement and transformation experts, authors and speakers in the industry, Erick has contributed to numerous industry publications and spoken at hundreds of events.

His published works include "The Guide to a Successful Managed Services Practice"; the definitive book on Managed Services, “The Best I.T. Sales & Marketing BOOK EVER!”, “The Best I.T. Service Delivery BOOK EVER!” and “The Best NOC and Service Desk Operations BOOK EVER!”, along with 50 Best Practice Guides.

Consulting Services for MSPs and Channel Vendors:



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