M&A in Remote Locations

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M&A is a viable method for businesses to increase their geographical reach, gain an edge over competitors and gain access technologies employees, assets or even employees. However, M&A is also a time-consuming and intensive process. It can take months to evaluate potential companies by conducting formal due diligence, which requires an exhaustive study of the company’s information – financial, commercial and operational. It is more difficult to succeed when the company is situated remotely due to the fact that the same steps must be followed but with added issues in collaboration and communication.

Preparing for Day One

When a business is acquired, the very first day of operations (known in M&A terminology as “Day 1”) must be planned. This includes establishing company structures, merging back-office infrastructure and IT systems, as well as communicating to staff how things will be handled in the future. The M&A team should also ensure that all necessary documents, such as legal agreements, contracts, financial models are in place.

Building a shared vision

A successful M&A strategy requires an understanding of the differences and similarities between the two parties – both in terms of culture and business objectives. This is particularly important when companies acquire and merging from a distance. Without a clear plan the new company could lose its direction and create tension in the workplace.

M&A can be a high-stakes business that often has unintended consequences. The sunk-cost fable, particularly can result in M&A decision makers to fall into agreement traps where they agree to an arrangement that is worse than the best alternative.