When implemented correctly, mergers and acquisitions (M&As) can be beneficial. To get it right, you must know how to handle the complexities. Paul Inouye, an investment banker, says that’s where good corporate governance comes in. He emphasized that properly managing an organization’s internal structures and processes is vital to successful M&As.
Proper governance makes it easier to form a new entity the right way. That way, everything falls into place. Policies, competencies, and procedures align seamlessly, ensuring a smooth merger. The best part about effective corporate governance is that you won’t struggle managing risks.
On top of that, it helps you comply with regulations while running the business more efficiently. It also ensures successful outcomes by focusing on shareholder value. With all these ducks in a row, maintaining continuity between the two companies is a breeze. Best of all, there’ll be transparency and effective communication.
So, what’s the best way to approach mergers and acquisitions? Here are the things Inouye says you should do.
Understand the organization better
It’s common for entities with different yet complementary characteristics to join forces. One organization may do things centrally while another spreads things around. Because of this, Paul recommends learning as much as possible about an entity’s regional variability.
Familiarize yourself with its processes and structures at a granular level. While you’re at it, get to know how both companies organize and manage critical data. This information includes products, customers, and locations.
Come up with good communication strategies
For an M&A to work, there’s a big need to define how various structures interact and share information. Inouye says this bit is super-important because the information isn’t always readily available or known. That’s why it’d be best to provide information kits. Doing so makes everyone’s job so much easier.
The last thing you want is to create information gaps that cause confusion. On the other hand, a good communication plan ensures that collaboration and productivity kick into high gear early on.
It’s vital that the communication kits indicate how the merger boosts both entities’ fortunes. The two organizations could benefit by improving the ease of doing business, cost savings, and a bigger portfolio. You can motivate employees by highlighting what kind of career development opportunities will arise.
Also, indicate the merger’s scope and schedule. At the same time, don’t forget to keep technology vendors and other stakeholders in the loop. That way, everyone understands the impact of changes and what’s expected of them.
Harnessing transformational value
Although it’s given that an M&A brings value to both entities, it’s best to maximize benefits by harnessing the combined resources. Paul says you must find ways to make the most of cost reduction and operational efficiency. So, look at the technology, skills base, and processes at your disposal.
Use these assets to increase the overall competitiveness and market share. If you do things right, getting new customers that were out of reach before the merger should be easier. Meanwhile, technological assets provide a surefire way to make things run more smoothly, boosting productivity. As a result, the business expands more rapidly in existing and new markets.
What’s more, your offerings may increase based on the other entity’s product or service suite.
About Paul Inouye
Paul has an MBA from The Wharton School at the University of Pennsylvania who ks based in Portola Valley, CA. He’s an investment banker who understands the importance of embracing M&A best practices for a successful outcome. Outside of work, he enjoys cycling, cross fit and travel.