Guide

Mergers and acquisitions

Is your business is ready for a merger or acquisition?

If you are thinking of growing your business through a merger or an acquisition you must consider if your business is ready for expansion. You should:

  • Carry out a SWOT (strengths, weaknesses, opportunities and threats) analysis to assess your business. Analysing your results carefully will show you how to build on strengths, resolve weaknesses, exploit opportunities and avoid threats. See a SWOT analysis example.
  • Assess external factors, especially the impact of the economic climate, on the price of a deal.
  • Ensure that you can access the necessary finances. See business financing options - an overview.

Assess the deal objectively

Be clear about what you expect from the deal. Any merger or acquisition must be consistent with the strategic direction of the business. Once you have assessed your own business and its finances, you should be confident the deal produces a higher return than investing the same amount of money internally or, if not, that other reasons justify the deal.

For a list of factors to consider, see benefits of mergers and acquisitions. For information on how to develop a partnership strategy, see joint ventures and business partnerships.

Consider a gap analysis

Another strategy technique is a gap analysis. This involves detailed analysis of where your business is now and where you want it to be in the future. By analysing the gap between the two, you can find ways to bridge it. For more information, see assess your options for business growth.

Remember that apart from paying for the business you acquire, you will have extra expenses to take into account. These will consist of professional adviser fees and the cost of the internal resources that will be taken up by the acquisition process.