A successful deal is a win-win for both parties, and is tracked in a variety of ways. Each deal is different, but there are certain characteristics every successful partnership must have.
Prepare thoroughly
Before sitting down at the negotiation table it is important to prepare thoroughly. This involves researching the market landscape and identifying synergies that could be a possibility. It is also crucial to know your counterpart’s goals, priorities and motivations. Understanding the other side’s goals, priorities and motivations will give you more leverage and ensure that the deal is successful.
Be prepared for the unexpected
Deal making is an unpredictable process, and unexpected alterations can cause a reversal of plans. The reason could be the sudden discovery of a regulatory issue an unexpected lawsuit, or some other situation, it is crucial for all parties to be prepared for the unexpected. This includes having a backup plan in place and an exit strategy in the event that the plan is not successful.
Identify the Key People
Buyers should consider retaining the key team members of the target company following a sale. It is typical for acquirers to not retain their top talent, which could slow growth post-acquisition and decrease value. It is essential to know the culture of the target and its value drivers to ensure it will fit with the acquired company’s. This will ensure that the acquired business can continue to grow its revenue after a deal. It is not unusual for a company that is buying to see a drop in revenue following a transaction. This is due to the fact that the acquired team is focused primarily on delivering the revenue goals and synergies that were set prior to the acquisition.