Knowing How to Achieve Success for Business Owners and Managers is Crucial for a Successful Transaction
Understanding managers goals and how they will define the success of an M&A deal is crucial to finding the most suitable targets and lays the foundation for an advisor to put in place measures to ensure the greatest benefit for their client and the involved businesses.
Market Share/Sales Growth
Market share is a key measure of success for business managers and can be a direct comparison on how their company is comparing to rivals. Companies with higher market share will enjoy economies of scale, market power, and will generally be able to attain and utilise higher quality management.
The market power derived from a higher market share can result in a number of benefits. Companies with higher market power establish a more renowned brand and can utilise their power and reputation to bargain for better contracts and higher prices to generate higher profit margins.
Managers reputations can often be judged on the returns they provide to the company’s investors. In regards to acquisitions it’s crucial not to be short sighted and simply undertake an acquisition if it will be accretive in the short-term for a company’s share price. Managers are often looking for acquisitions to bring significant benefits within 1-2 years, thus being more holistic when analysing a target looking into its culture, technological advancements and strategic fit, oppose to simply its affect on short-term company value will likely see the manager be able to generate the greatest return for investors.
Retention of Key Customers
Key customers significantly contribute the reputation and revenue for a business. A manager may have a strategy that can be highly beneficial to one of their competitor’s key customers and acquiring their customer may be the best method to implement their strategy, thus the success of the deal would be highly dependent on the customers retention. Advisors can ensure that part of the acquisition is dependent on the retention of certain customers.
Managers are generally looking to expand their business and minimise costs to maximise profit margins. Often companies costs can rise beyond sustainable levels and acquisitions for more efficient processes can become necessary. To achieve this it’s important to analyse innovative and efficient companies. Combine the savings made from using the target’s innovations or efficient processes with simple cost synergies from eradicating duplicated functions more efficient and sustainable.
Quality employees are the backbone of a number of organisations. Acquisitions can be made to acquire employees of other successful companies in their industry. Examples of this also occur when a CEO is nearing retirement and a company’s board is looking for a suitable replacement, or when a company is looking to open a new similar division, they may acquire a company to form the basis of that division and need stipulations to maintain the key employees.
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Quinn M&A’s expert team of business transaction advisors can assist you to with all of your business acquisition, divestment, and valuation requirements. Contact Quinn M&A today on +612 9223 9166 or submit an Express Enquiry to arrange a confidential no cost consultation with one of our Senior Advisors.