Connect with us

Success

Factors of Considering M&A to Your Company

Eric Allison

Published

on

Factors of Considering M&A to Your Company

As of 2019, the number of entrepreneurs worldwide has ballooned to 582 million. Despite this remarkable surge, it’s been reported that 22.5% of small businesses actually fail within their first year of operation. These statistics only prove how complex and ever-changing the corporate world is.

Thus, every ambitious business owner must be educated in various ways to manage sweeping economic changes. If you also run an enterprise, you should be aware of different strategies that will allow you to mitigate losses and create more viable opportunities.

A popular example is merger and acquisition (M&A), which is an expansion practice adopted by many international firms for their wide range of advantages. However, since corporate matters can sometimes lead to unexpected outcomes, any major move should be carefully scrutinized before taking a course of action.

Looking to engage in M&A? Below, we have compiled some crucial factors to take into account. But before that, let’s have a brief discussion on how the two processes work.

Mergers and Acquisitions | An Overview

As defined by global education provider EduPristine, M&A are methods of consolidating companies. To differentiate the two strategies—mergers entail the “merging” or combining of two businesses, while in acquisitions, one large corporation “acquires” or takes over a smaller organization.

There are multiple reasons why business owners resort to M&A, but in general, motivations revolve around the maximization of wealth. The processes of M&A can be accomplished through different ways, such as acquiring common shares, exchanging shares, exchanging shares for assets that have high monetary value, and purchasing assets.

Mergers are classified into three primary types: horizontal (the companies belong to the same industry), vertical (the companies are combined but operate individually and serve different purposes), and conglomerate (a group of businesses that are unrelated or belong to a wide array of industries).

Key Considerations to Take into Account When Facing a Merger or Acquisition

Regardless of what type of expansion strategy your company will be involved in, taking certain steps can boost the success of the integration and ensure a favorable conclusion for both parties.

1. Reassess your reason

As previously stated, there are several reasons why business owners opt for M&A. For instance, when an enterprise has achieved financial stability and consistent growth, it’s deemed ideal to pursue expansion. However, expanding can be tricky, especially if you plan to branch out, penetrate foreign markets, or enter a different line of industry.

Accordingly, buying a business that has already been established in the location or industry that you wish to explore can help reduce risks. This move can also help you lower the amount of capital, increase market shares, and absorb technologies that can improve your operations.

However, if you’re the selling party, your decision can be motivated by various reasons. Pamela Wesley, CEO of Cerius Executives, share that business owners choose to sell their company to liquidate their monetary value, avoid risks, and seek new opportunities.

If your company is already struggling, selling it will allow you to salvage a portion of its monetary value and use that amount for business financing for a different venture. You can also save your business by merging with a larger enterprise.

Whether you’re the one buying or selling, evaluating your primary motivation is necessary to match your objectives with the detailed integration plan. It also helps you figure out if M&A is indeed the right choice.

2. Work with a suitable partner

Choosing the wrong partner can be extremely detrimental to the entire transaction. In fact, it can result in difficult negotiations, and in worse cases, abortion of M&A. Thus, be sure to meticulously assess a company to determine if it’s a strategic, organizational, and cultural fit to yours.

Moreover, it’s vital to work with a reputable and trustworthy enterprise that is guided by values and a mission statement that you also believe in. Mutual trust between the two parties allows for smoother negotiations and better cooperation.

You also need to calculate potential synergies or the particular aspects where two companies complement each other. Careful estimation enables you to analyze the feasibility of the synergies, so in the implementation stage, these planned synergies can be successfully realized.

3. Determine the company’s accurate value

Quality valuation needs an in-depth study of the company’s history, financial reports, and other factors linked to profitability. A poor valuation can lead to an inflated price, making the transaction a failure of hindsight, regardless of how efficiently the integration proceeds.

If you’re the seller, it’s also critical to know that the offer price is negotiable. Forbes suggests that you look into market comparables, the level of expertise and experience of your management team, the projected growth of your business, and the proprietary technologies your organization licenses or owns. Additionally, if there are multiple bidders, negotiation will be even more ideal.

4. Prioritize effective communication

For effective communication between the two parties, select a competent management team and reliable consultants. These professionals will guide the entire process and make sure that honesty is upheld in the communication within and outside of the organization.

Moreover, it’s essential to coherently convey the integration plan to all employees for smooth and swift implementation. To add, an impending merger can distract and stress employees, which can impact their performance negatively. The managers will be responsible for inspiring confidence among the workers to make sure that efficiency won’t be compromised during the integration phase.

5. Consider the legislation and present economic condition

Legislation, both national and international, can either validate or hinder M&A, considering its significant influence on property ownership and financial reporting. This is especially true for organizations with huge market share, as they are usually under the control of legislative power.

Because legislation can greatly affect the M&A’s success, it’s a must to consult a legal professional and assess applicable provisions to make sure that the transaction is capacitated by law.

Furthermore, while M&A transactions are organization-specific, the state of the economy still holds influence on how they will fare out. Thus, in addition to favorable legislation, an agreeable economic climate can also heighten the likelihood of success.

The Takeaway

Considering vital factors can help you gauge if M&A is worth a shot. Remember, abortive attempts not only waste your time and financial resources. During the transaction, business-sensitive information is also exchanged, so your company will be put at risk if it fails. Therefore, do a careful analysis of various aspects of M&A and seek the assistance of experts before proceeding.

Eric is a serial entrepreneur with a high degree of experience in both fields. After putting up several of his own successful Staffing firms and eventually brokering their exit he began his career in M&A.​ ​ Eric has an in-depth understanding of both the buy-side and sell-side of Mergers & Acquisitions, having had first hand experience on both ends of the deal.​ ​ Today, he is known as a dynamic and passionate visionary with remarkable M&A instincts targeted at achieving highly-strategic goals. Eric has successfully completed multiple cross-border M&A transactions in the US and Asia and has widened his focus to the Staffing and Recruiting, Healthcare and IT industries.

Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Success

3 Strategies for Lifelong Learning

Avatar

Published

on

Strategies for Lifelong Learning

Photo by Dmitry Ratushny on Unsplash

Famous American author Mark Twain once said, “Anyone who stops learning is old, whether twenty or eighty. Anyone who keeps learning stays young. The greatest thing you can do is keep your mind young.”

What’s interesting about this quote, and many others from Mark Twain about learning, is that the author didn’t go to college. In fact, he dropped out of school in fifth grade to work as an apprentice to a printer. Today, he’s recognized as one of the most famous authors and lecturers of all time. We can learn a lot from Mr. Twain’s quotes about lifelong learning and its importance.

Lifelong learning isn’t just about having a formal education. The “school of life” is an endless wealth of knowledge just waiting to be grasped. Thankfully, there are different strategies you can use to continue learning for the rest of your life, so you never become stagnant, and according to Mr. Twain, you’ll keep your mind young.

Let’s look at a few of those strategies and how you can implement them into your own life to consistently learn and grow.

1. Understand Your Learning Style

Everyone learns differently, and at different paces. Learning at your own pace is called asynchronous learning, and it’s an important concept to grasp if you want to keep learning new things throughout your life. Asynchronous learning allows you to pick up on things in a way that works best for you, so you don’t feel forced into understanding loads of information right away.

When you’re able to learn at your own pace, you’re more likely to take in continuous information and understand it.

It’s also important to understand your individual learning style as you go throughout life. There are several different types of learning styles, including:

  • Visual
  • Aural
  • Verbal
  • Physical
  • Logical
  • Social

Everyone learns differently, and one style isn’t necessarily better than another. If you give two people the same piece of information, how it’s presented to them can have a strong impact on what they remember and how well it sinks in. For example, if you tell them something verbally, an aural learner might have a better understanding than a logical or physical learner. Some people are even multi-modal learners who use more than one learning style to digest information. Understanding more about your style can help you to put yourself in situations to foster it.

2. Taking Care of Your Body to Sharpen Your Mind

There is an incredibly strong connection between your body and mind. While you absolutely need to “exercise” your mind, you can also keep it sharp by keeping yourself physically healthy and active. Entrepreneur and motivational speaker Jim Rohn once said, “Take care of your body. It’s the only place you have to live.”

You can’t keep learning if you’re not properly taking care of yourself. It’s no one else’s responsibility but your own to treat your body with respect. Doing so can actually improve your focus, cognitive function, and memory.

So, what can you do physically to give your brain a boost?

First, make sure you’re getting enough sleep. Your body sorts out and stores memories while you sleep, and not getting enough of it can keep your brain from storing new information properly.

It’s also important to make sure to exercise and eat right to boost brain function. Healthy fats and dark, leafy vegetables have been shown to improve brain function, and regular exercise can help to increase the size of the hippocampus. That is the part of the brain responsible for verbal memory.

You can also “exercise” your mind and improve your memory with things like mnemonics. Mnemonic devices can be acronyms, rhyming phrases, groupings of numbers, or visualizations that help you to remember certain things. You can use them to remember anything from people’s names to what’s on your grocery list for the week, and using them regularly can help to keep your mind and memories sharper.

3. Set Learning Goals for Life

One of the best ways to keep yourself motivated for lifelong learning is to write down some of the things you’d like to learn. Then, find the resources that can help you accomplish those goals. If you want to break into a specific career or industry, you may not necessarily have to go to college to learn the right skills.

Consider whether what you really want to do requires a college degree or not. In many cases, you can learn what you need from your local library or by always having a book in hand. Abraham Lincoln once famously said, “Whatever you are, be a good one.” While Lincoln did go to college for a legal degree, it’s easy to argue that much of what he’s known for today happened by learning through experience, even when he was faced with impossibly demanding situations.

Lincoln’s quote can also motivate you to put your learned skills into practice. If you do have goals in mind, you’ll continue to learn more about them when you start doing them. You can read a thousand books on how to fix a car, but you’ll likely end up learning more when you get under the hood and look at the engine, yourself.

Continuous lifelong learning is about immersing yourself in as much knowledge as possible. That knowledge will come from books, other people, and personal experiences. You don’t have to follow a specific educational path in order to be a lifelong learner. Instead, you have to have a willingness to keep growing and expanding your mind. If you’re able to do that, as Mark Twain suggested, you’ll be able to keep your mind young.

Did you find this helpful? Do not hesitate to share.
Continue Reading

Success

What Is Imposter Syndrome and How Could It Be Affecting Your Leadership?

The Inspiring Journal

Published

on

Imposter Syndrome

Photo by Austin Distel on Unsplash

Have you ever felt like you aren’t worthy of your achievements? You constantly find your family, friends, or team looking up to you for advice even though you feel like a fraud giving it?

If so, you may be experiencing imposter syndrome. Imposter syndrome is an extreme case of self-doubt that has reportedly affected 70 percent of millennials. This self-doubt stops you from chasing after your goals and let you feel proud of those you’ve already nailed. But guess what? You’re worthy of the achievements you have earned. You are worthy of your place no matter what stage of life, or your career, you are in.

This syndrome may deter you from reaching your biggest career goals. If you think you may be experiencing imposter syndrome, Mint created an infographic explaining the different types, how each type may affect your finances, and tips to overcoming it. Keep reading for tips to pushing past and achieving your biggest goals.

What Is Imposter Syndrome + How Much Its Costing Us

Continue Reading

Success

Guide to Buy Foods in Bulk for Your Restaurant Business

Avatar

Published

on

Guide to Buy Foods in Bulk for Your Restaurant Business

Image source: Pixabay

So you’ve opened your own restaurant for the very first time? Well, congratulations at first! It sure is a big achievement and a very wise decision too, considering that the food and beverage industry is one of the most rewarding businesses today. People are always on the lookout for newer tastes and better dining experience and any new entrant in the market is always welcome.

Yet, the task can be quite daunting as well, especially for first-timers. There’s lots to take care of – seating, décor, ambience, and of course the most important of them all, food! It’s the prime substance upon which your restaurant is going to thrive. Interestingly, it’s also one of the major cost-generators of your business because you’d always be in need of it.

And since you’ve opened new, you wouldn’t ever want to fall short of supplies lest turn customers away from your restaurant at any time. Now, with rising food costs, it’d only be wise to start thinking about stocking up food supplies at discounted rates to help cut down on costs. You’d need help in doing so and we’re here to help. Here’s a short guide on bulk restaurant food supply for your business.

Tips on Buying Bulk Food for Restaurants

The prime advantage of buying in bulk is that only when you manage to get a good price for your supplies can you afford to offer food to your customers at competitive rates. This in turn means more business for you in the long run. Here’s how you can intend to achieve this goal:

1.

Consider opening an account with a trusted broadliner. They’re engaged in the business of restaurant food supply in large quantities. Opening an account with them would kick-off regular delivery of the required food items for your restaurant – everything from fresh produce, meat and seafood, to even pre-prepared items. You can choose the frequency of delivery – daily, weekly, or monthly – depending on your individual requirement.

You can find some of the best reliable broadliners in the area where you operate your business from leading restaurant magazines, professional associations, and trade shows. You might be required to submit proof of running an established restaurant and proof of enough funds to ensure timely payment of bills, for opening an account with a broadliner.

2.

Become a member of a retail warehouse. The latter differs from conventional grocery stores or supermarkets such that they sell food in relatively higher quantities. Besides, any food service business, including restaurants, can make bulk purchases to meet their food requirements by becoming a member. It’s that simple.

This method is particularly helpful to new restaurants, some of which aren’t able to secure credit accounts with big broadliner groups. Retail warehouses enable these restaurant start-ups to buy food in bulk.

3.

Contact local farmers and food manufacturers – they’re a vital component of the food supply chain too. You can get all your fresh produce, including fresh meat and dairy, from the farmers. Local manufacturers, such as bakeries, can help you with bulk supplies of breads, rolls, buns, and the like.

4.

You can also consider making bulk purchases from food catalog firms, which act as middlemen between the farmers or manufacturers, buying supplies directly from them and supplying in bulk to wholesalers or retailers. Most catalog companies generally work with canned food distributors for supply of dry consumable items such as beans, nuts, or coffee, and usually offer discounts on large purchases.

5.

If you like to keep your bulk shopping restricted to a single stop for ease of convenience, we recommend purchasing supplies from national wholesale food suppliers. They are truly your one-stop shop for everything you need – meat, fresh produce, dry consumables, dairy products, or desserts. These groups work in collaboration with a huge network of farmers to obtain a large variety of supplies for restaurants.

6.

Organic suppliers are also worth considering, particularly in light of increasing awareness among consumers over the multiple health benefits of organic food. By serving food prepared from organic ingredients and supplies, you’d only be giving a boost to your restaurant business in no time. Organic suppliers can range from large national-level wholesalers to local farms too.

7.

For your bulk fresh meat supplies, you might want to stick to collaborating with local butchers as well, just as you work with local farmers and local markets for fresh produce and dry goods, respectively. They can be your single source of purchase for fresh cuts and even guide you on where the meat’s coming from. Passing on this information to your consumers would speak a lot about your repute.

8.

For supply of beverages like wine and beer, getting in touch with beer and wine suppliers is a good idea. Again, beer suppliers may vary in size – from nationally renowned brands to local craft breweries – and you might want to keep both the sources to offer variety to your customers. Besides, greater the variety, better the price discounts too.

Not to forget, a large number of bulk beer suppliers would happily provide free stuff for your restaurant too – from table tents and pint glasses to umbrellas, coasters, and menu boards – all branded with their logo for promotion but cost you nothing at all!

Similarly, for your wine supply, you may need to make a choice depending on your requirement. For instance, if your restaurant intends to sell more of wine, then you’d be better off working with a sommelier who’d already have established connections with several wine suppliers. Also consider the newer technology of serving wine on tap which is fast gaining popularity among customers and can also help you cut down on costs.

Conclusion

Restaurant business is a great idea provided you have the right connections with the right people who’re reliable to deliver on time, offer bulk supplies at discounted rates, ensure the best quality of produce, and are also able to provide the right guidance on newer products and varieties in the market.

Continue Reading

Subscribe for Updates


Trending