The process of any merger necessarily occurs in stages.
Stage 1 Is the Merger Worthwhile ?
The key steps are:
- Conduct a detailed analysis of each business to:
- Review current business plans
- Review current contracts and tenders in progress
- Examine business structures
- Consider fixed and variable costs
- Examine product costings
- Identify potential areas for savings
- Obtain a synchronised platform for a merged valuation
- Identify any “quarantined areas” and eliminate them from calculations
- Value each of the businesses individually
- Consider the potential to sell the businesses separately
- Consider and, if necessary, prepare a brief strategic plan for a merged business (this is usually done with a joint workshop at a central location and is then completed by BPS Advisory in summary form).
- Value the hypothetical merged business.
- Provide the following reports:
- Individual reports regarding business value and the potential benefits and risks of a merger, together with suggested mitigation strategies (these reports can be shared by the parties but we issue them privately).
- Shared reports regarding the value of a merged business that can be compared to the current situation for each party).
- A strategic recommendation for:
- Merger and / or some other commercial relationship
- Realisation strategy – whether listing or sale or some other model
At the end of Stage 1, each party needs to decide whether to proceed or not. This is not a decision that is made on facts and figures alone. Each party needs to decide whether they can work with the other and within the framework of a larger, joined business. If the parties do decide not to proceed, all of the materials provided to BPS Advisory will be returned to their owners and the project concludes.
Depending on the information available to us, Stage 1 can be completed in around 4 – 6 weeks.
Stage 2 Making a Merger Work
If the parties decide to proceed, there is a substantial amount of work to be done before the merged business begins to trade, including:
- Adoption of a shared set of business objectives including an exit strategy.
- Confirmation of the new strategic plan including:
- Combined operations
- Future work generation
- Management of legacy issues
- Consideration of opportunities to buy other industry participants
- International business development
- Development of an appropriate corporate structure, noting various audits and registrations in place and contracts already issued.
- Board roles and responsibilities including the involvement of independent parties (if required).
- Management roles and responsibilities.
- Determination of accountants and lawyers – having particular regard to audit requirements etc. for future exit pathways.
- Development of a corporate brand strategy and brand transition strategy.
- Consideration of potential vertical integration strategies
- Detailed organisational restructures as required
- Confirmation of revised workflows
- Communications to key stakeholders
- Employee retention strategy
- Execution plan and timelines
Depending on the outcomes from Stage 1 and the outcomes from the workshops to be held, Stage 2 will usually take between 4 – 8 weeks.
This means that a client could potentially execute some form of merged business agreement in as little as 8 – 14 weeks.
Stage 3 Execution and Beyond
Having regard to the overall project objectives of the parties and the fact that any merger or acquisition project creates a new business, any merger is not the end goal, but merely a major milestone in the life of both businesses.
Successful acquisition and / or merger transactions are notable for their discipline and commitment to integrating the best elements of both businesses to create something bigger and better than either party could have achieved on their own.
BPS Advisory has facilitated a number of transactions and strongly recommends post-implementation reviews to ensure that actual behaviour is reflective of the objectives and strategies adopted during the pre-settlement phase.