What Should You Consider Ahead of a Merger & Acquisition Process?

Like almost every other area of business since March 2020, mergers and acquisitions activity has been affected by the coronavirus pandemic – with a notable slump as uncertainty halted proposals and plans. Whether we see a future return to traditional M&A or an alternative version isn’t yet known, but Deloitte have reported that there is appetite for new non-traditional M&A given the economic uncertainty globally.  

In the UK, since March 2021, ONS have reported an upward trend in M&A activity as the markets slowly pick back up and a return to pre-pandemic levels is expected over time.  

An acquisition can be an excellent way to enhance or cement your company’s position. But don’t underestimate the scope of the work involved in making it a success. As the economy slowly finds its feet again, here are some key exit and sale considerations to keep in mind:  

  1. Contractuals: Your legal paperwork will need to be in order. This will include partner contracts, supplier contracts, exit clauses, support for transition/tender and details of the sale offer and the implications. 
  2. BAU: Whilst the merger takes place, there will be an active customer base requiring business as usual. Make sure you continue in flight service provision and clear any backlog BAU resource requirements.
  3. Data: Map the data which is held, consider all systems and volumes. You will need to be mindful of GDPR requirements around data retention. Make sure this is consistent with any possible requirement to provide data to support the transition/tender.
  4. Facilities, Infrastructure & Assets: The logistics challenge. What will happen with offices/leases and contracts. Have you considered what to do with IT and telephony equipment and requirements? Are there any other assets to consider?
  5. Leadership: who will be leading the merger and how will the senior roles be affected? It is important to identify the key individuals quickly and be clear about their roles, so they can help cascade change through the organisation and transition to the new structure.  
  6. People and HR: Are there plans in place to run down the business ahead of the merger? You will need to start HR consultations/TUPE/redundancy processes. Are there retention and outplacement plans? You will also need to plan how to address the impact on people and morale. Any change is a complex and often unsettling process. Be sure to consider Change Management to make the transition as smooth as possible. 
  7. Regulatory Plans: Your strategy to run down operations will need full compliance with employment law. There may be liabilities under existing partner agreements which need to be worked through and managed. 
  8. Systems: Technology integration can be challenging, especially in a remote working environment. Current IT systems and business processes will need to be aligned and plans drawn up for the transition. Cybersecurity is a huge concern for planning a deal in a virtual environment and will need a safeguard approach.  
  9. Communications: Once the deal has been agreed, a clear communication strategy will need to be implemented with appropriate timings. You will need to consider communications to employees, partners, suppliers, customers, stakeholders, regulators etc. How will you deal with any leaked information which escapes into the public domain? You could plan an emergency comms plan for the media to address this. 

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As deals come back on to the table and businesses prepare for the future, make sure you have full visibility of the implications involved. Nine Feet Tall have worked with clients through M&A processes to ensure the transition is planned to the letter and well executed. If you would like more information please contact EstherM@NineFeetTall.com  

Sources:

https://www2.deloitte.com/us/en/pages/mergers-and-acquisitions/articles/m-a-trends-report.html

https://www.ons.gov.uk/businessindustryandtrade/changestobusiness/mergersandacquisitions/bulletins/mergersandacquisitionsinvolvingukcompanies/januarytomarch2021

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