In the financial press, stories about mergers and acquisitions that take place in SMEs and large corporations are published every day. While boosting revenue or gaining exposure to a brand new client base are usually the primary reasons for companies to enter into M&A, it is important to develop a thorough strategy to ensure success.

A successful M&A is a complex process, and the final result depends on many factors that both parties must consider. A well-run management team is crucial to ensuring that your business can effectively navigate the M&A process. External accountants and consultants can enhance the credibility of your M&A strategy if you seek their help.

The first step in the process is to perform an extensive financial health assessment for your business. This includes looking over profits and losses statements, assessing cash flow by analyzing debt/equity proportions, and to determine if you have the liquidity to pursue an M&A deal. The financial health check will also identify any differences between your Management Accounts and Statutory filed accounts, which can create confusion for a buyer.

Another crucial aspect is to take into consideration the costs of integrating both companies. This could include physical costs like merging systems, offices and employees. It could be in terms of human capital expenses, for instance the cost of benefit and compensation programs. Involving experts in human capital early in the process can help you assess these costs and build them into your price negotiations for purchases.

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