M&A is a potent way for businesses to grow. However, the acquisition process is prone to pitfalls that can cause acquired businesses to lose their value. Making sure you follow these four steps to an acquisition that is successful can help you avoid common pitfalls and ultimately make your next acquisition a successful strategy to increase growth.

1. Make a plan for your purchases.

One of the primary reasons for failed acquisitions is inadequate planning. By establishing an acquisition strategy from the beginning, you can make sure that your business is maximizing its value and is on the right track with your M&A goals.

This involves making a list of M&A targets and then narrowing the list by using search criteria. These could include things such as industry sector size, deal size, market share and operational scale. Corporate development teams can utilize a variety of resources to determine M&A potential companies, which include online sources such as DealRoom and LinkedIn trade publications and industry associations, as well as databases of investment firms and private equity companies.

2. Create a team that will manage the M&A Process.

It is vital that management teams establish an organization headed by an executive with seniority who can oversee the M&A from beginning to end. This is crucial to ensure the strategic intent behind the acquisition doesn’t get lost and that the integration process goes without a hitch. It is also vital to have experts in human capital on the M&A team to calculate the cost of benefits and compensation and to quantify the actuarial cost of pensions and other financial obligations.

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