Now is the right time to conduct mergers and acquisitions (M&A) in India due to its positive GDP growth this year. However, while interesting, it is undeniable that mergers and acquisitions are challenging processes as they require a huge amount of time, resources, effort, and expertise.
For this reason, several mergers and acquisitions transactions fail when companies are not aware of the potential threats. Nevertheless, investors can prevent these risks and errors without having to experience them first.
We have prepared a list of the 5 worst M&A errors or mistakes you can make while going for a merger and acquisition transaction so that you avoid them.
Not understanding the regulations
M&A transaction is not possible if the company does not comply with applicable local regulations. So, you must understand your industry’s compliance requirements.
The companies involved in M&A transactions need to be aware of compliance conditions as the agreement may fail to proceed due to a lack of understanding of the M&A rules.
Not carrying out due diligence
Not taking the due diligence process seriously or not conducting this process is considered to be one of the worst mistakes a company can make, and it can be avoided. Many companies underestimate due diligence and only scratch the surface of the target company.
The due diligence involves not only the financial facets of the other company but also its reputation in the market, its potential for the future, level of employee satisfaction, model, risk adjustment, and future goals. Don’t just focus on financial reports.
Following the heart is not common logic
Business owners or investors sometimes let desire overrule logic at the time of doing M&A. A savvy investor never lets his/her interest or desire blind the facts regarding an M&A agreement.
It doesn’t matter how admirable a company may appear, if the M&A transaction makes no legal and financial, or other sense, in the end, nothing profitable will come your way.
Paying more than you should
It often happens that entrepreneurs or business owners are so impatient to complete an M&A transaction that they pay a too-high price.
To put it another way, they may pay more than the agreed price. In order not to experience this, the acquirer must devote additional efforts and time to negotiating with the target firm or should turn to Transaction Advisory Services in India.
Not having a professional team
A small mistake can lead to poor results or complete failure. But working with a specialized team of transaction advisors can assist in avoiding such types of small or even big mistakes.
Before negotiating an M&A agreement with anyone associated with the target company, be sure to discuss the M&A plan with a Transaction Advisory Firm in India.
Mergers and Acquisitions with CAC
CAC’s transaction advisory specialists provide professional advice before you sign an agreement. The team of CAC prides itself on its capacity to obtain positive results in a challenging market. Its capabilities make it easier to assess risk and identify problems in M&A transactions.