When a CEO in California decides to acquire another business, the acquisition needs to have some sort of strategic value. While a vast majority of mergers don’t work out, those that do can result in significant returns for shareholders. Therefore, it is important to have a vision as to why the acquisition is taking place and which businesses are worth trying to buy or merge with. It generally isn’t enough that a merger gives an organization the ability to scale or access new markets.
Having access to new markets or products only matters if those new markets or products help the company make money. Generally speaking, companies that focus on customer service should acquire other businesses that focus on improving a customer’s experience. If a business focuses on designing products, it should merge with other companies that focus on that element as well.
It is important that CEOs take time to impose a single corporate culture across the newly expanded organization. For instance, companies that design products generally benefit from leaders who let them make decisions based on a few core principles. Organizations that focus on customer service do better when employees are led with guidelines that allow them to care for their patrons. By unifying the culture, it is more likely that a merger will be successful.
It is important for an acquiring company to do its due diligence whether a merger is hostile or friendly in nature. Doing diligence may ensure that a deal helps to meet a company’s strategic goals. This might be done with the help of business attorneys, accountants and other relevant professionals. An attorney may help structure a merger or acquisition in a way that is palatable to shareholders, regulators and other interested parties.