Mergers and acquisitions aren’t easy, so it’s important to prepare for all the aspects that can go wrong once you begin the process. Some are out of your control whereas others are foreseeable and can be avoided as long as you recognize the common mistakes that can affect disclosure.
- Not having the right data room prepared
It goes without saying that an incredibly important part of facilitating a smooth transaction during M&A is the virtual data room provider you partner with and preparing your VDR accurately for the initiation of a deal. Smooth due diligence is crucial in ensuring that any buyers or investors are kept completely informed of all aspects of your business on a platform that offers the utmost security and ease. When beginning your M&A, be sure to take the necessary amount of time to prepare your virtual data room with all relevant information that a buyer can review so that you remain accountable during the process.
- Having the wrong people on your side
Not hiring the right advisory firm or not partnering with the most efficient VDR provider can be incredibly detrimental to the progress of your deal. Advisors are there to assist you through vital processes, such as negotiating deal terms and the signings of NDAs, so without a team that has your best interests in mind you can find your deal failing. Similarly, with the wrong VDR for your business you can make a deal much more complicated and time-consuming than it needs to be. With a bloated interface and unnecessary features, those contributing within a data room can find it difficult to accurately review all the information to perform smooth due diligence.
- Expecting the deal to be quick
If you expect your deal to be closed within a few weeks or months of opening, then you will be sorely disappointed. Most deals take close to a year to close and you should be prepared for the time frame before you dive into an M&A as it can affect our resources and the attention to your business. On the other hand, you shouldn’t let a deal drag on for too long as it is common for the terms to get worse with more time and for a deal to not happen at all. Appoint an authority to make quick decisions during the process and a lawyer that will push for urgency on the terms so that your deal can close as quickly as possible.
- Discounting the importance of an appropriate NDA
During M&A, an appropriate NDA is there to protect the seller during the process, especially if the buyer is a competitor. The NDA should set up terms and conditions that are there to keep the seller safe while limiting the buyer’s ability to disclose any information that is shared within the virtual data room about the company or the process as well as contacting any employees at the company or customers. This is one aspect that you should not let slip during the M&A process as it can cause your business harm down the line if the deal does not end up happening.
- Losing sight of business during an M&A
While M&A is a tedious and time-consuming process, there is no excuse as to why you might lose sight of your business during it. It is important that you still remain aware of what is happening within your company and continue to progress with any goals and growth prior to the deal so that your business is still running smoothly and your numbers remain steady. Losing sight of the day-to-day operations can be detrimental to your deal if your company is not growing in line with projections you have given to your buyer. The last thing you want is for your deal to end, take longer than initially assumed, or be renegotiated midway through the process.