Four Mistakes that Could Undermine an M&A Transaction

Mergers and acquisitions (M&A transactions) are an important part of the overall growth strategy of many businesses. The current market for mergers and acquisitions appears to be strong: According to a report from Deloitte, nearly 80 percent of industry analysts expect the number of M&A deals to rise in 2019.

As alluring as these transactions can be, it is crucial that business owners and managers carefully consider the risks. With proper planning, companies can avoid many of the common errors that undermine the effectiveness of these deals. Here, our experienced Chicago mergers and acquisitions attorneys highlight four common mistakes that can cause M&A deals to fail.

1. Lack of a Compelling Strategic Rationale

As a starting point, businesses need a compelling strategic rationale before entering into any M&A transaction. In too many cases, companies enter into ill-advised transactions without realistic or attainable long-term goals. These type of deals are risky and offer little potential for gain. When considering a possible merger with or acquisition of another business, it is imperative that companies always carefully weigh the benefits and the risks. A clear-eyed view of the potential upsides and the possible downsides will ensure that your company is making a sensible deal.

2. Inadequate Due Diligence

In assessing a potential merger or acquisition, businesses must perform proper due diligence. No stone should be left unturned. Before entering too far into a transaction, companies must conduct a careful review of the target business. Some relatively common errors in the due diligence process, such as lack of rigorous criteria for the target company and sloppy deal evaluation, can lead to major problems.

3. Poor Execution During the Integration Phase

One of the major challenges associated with an M&A transaction is the effective integration of businesses. Much of the fundamental value in an M&A deal lies is in identifying and taking advantage of the synergies and efficiencies that arise out of the transaction. However, without proactive integration planning, many companies miss some of their best opportunities. Problems such as conflicting corporate cultures, overall complexity, poor communication, and lack of transparency can undermine the success of a business.

4. Failure to Involve Appropriate Expertise

Finally, too many companies fail to seek professional legal guidance. Even seemingly minor mistakes in the course of an M&A deal may cause very serious problems down the road. In some cases, companies may even face legal liability. Regardless of the nature of the deal, it is crucial that businesses seek qualified legal advice as early in the process as possible. A lawyer will make sure that the transaction is handled and executed properly.

Get Help from Our Chicago Mergers and Acquisitions Attorneys Today

At North Suburban Legal Services LLC, our top-rated Illinois business law attorneys have extensive experience representing companies in all stages of mergers and acquisitions. No matter your specific circumstances, our legal team is prepared to help. For a confidential business law consultation, please do not hesitate to contact our Chicago law office today at (312) 909-6089.