Mergers and acquisitions – whether large or small – are always in the news, even in financially challenging times like the present. The Growth Through Mergers & Acquisitions program, which is a new course that starts in 2024, is designed for anyone who wants to get to grips both with the big picture and with the component parts of M&A issues.

– The press releases that a company issues after a merger or acquisition often highlight the synergies or value-boosting effects envisioned as a result of the merger or acquisition, and the media runs stories about the positive effects of the deal. But the truth of the matter is that it’s then that the real work starts. And it’s vital to be thorough, all the way down the line, says Tomas.

Mergers and acquisitions can, in slightly simplified terms, be divided into three stages: strategy, transaction, and integration. And whilst all of these stages are important, there are also some stages that link the quantitative elements with the qualitative ones, such as how to take the culture of a merged or acquired company on board, or whether the purchase is offensive or defensive.

Tomas says that there is a very real need to understand the holistic approach to a corporate merger or acquisition. Acquisitions are an ongoing process and one that occurs at every level.

– That’s also a little of the appeal of mergers and acquisitions, because it’s not just big companies that are involved here – mergers and acquisitions occur across the entire corporate spectrum, from large companies to small.

It’s often said that mergers and acquisitions are based on gut feel. How true is that?

– To a degree, sure, but they also have to be supported by know-how and facts. Because how can you make a decision that involves so much money and so many people on gut feel alone? asks Tomas rhetorically.

 

What challenges do mergers and integrations pose?

— The number one challenge is the integration process and the cultural amalgamation, when two organizations are combined into a single functioning unit where people work together. Number two is a valuation and negotiation problem. To put it crassly, there’s often a risk of paying too much for the purchase object. When it comes to the crunch, there are a lot of stakeholders and interested parties involved in the bidding process, so you need to think about what can happen when you’re buying a house: it’s very easy to get carried away in the bidding process and to pay too much when it comes down to the wire. A third challenge, if you can call it that, is that some people are good at creating their own evaluation metrics that eliminate the undesirable elements of the merger or acquisition after the fact.

Tomas says that KPIs can be designed and whitewashed however you like, but that taking everything into account up front can be a smart move.

— Far too often, neither the critical analysis nor the big picture is in place. The information is right there in front of you, but it can be difficult to take all of the data on board. Which is why it’s a good idea to know what you need to focus on and to acquire the expertise you need so you don’t put your foot in it.

 

"YOU NEED TO KNOW WHEN IT’S TIME TO WALK AWAY FROM THE NEGOTIATING TABLE. I KNOW THAT’S NOT THE EASIEST THING IN THE WORLD TO DO, BECAUSE IF I DON’T BUY, ONE OF MY COMPETITORS WILL, GIVING THEM A COMPETITIVE ADVANTAGE. IT’S VITAL, IF YOU’RE GOING TO AVOID THIS SITUATION, THAT YOU’VE THOUGHT AHEAD.”

 

What are the keys to a successful M&A?

— Thoroughness, both before and after the M&A. Before, in the form of valuation and due diligence, and after in the form of the integration work. And paying the right price. You need to know when it’s time to walk away from the negotiating table. I know that’s not the easiest thing in the world to do, because if I don’t buy, one of my competitors will, giving them a competitive advantage. It’s vital, if you’re going to avoid this situation, that you’ve thought ahead, says Tomas.

The entire HR department needs to be on board throughout as well, stresses Tomas, because they’re the ones who bring the culture carrier element to the table. There needs to be a clear internal communication strategy in place on the day the merger or acquisition occurs. The big picture perspective is of the utmost importance in ensuring that the M&A doesn’t just succeed on paper but that it does so in reality as well.

 

But this sort of full-on engagement is hugely time-consuming, surely?

— The way I see it, there is no alternative,” says Tomas. “Something as complex as a merger or acquisition, particularly if it’s a big one, has to be allowed to take time and to cost in terms of internal resources. You need to focus on the right things, of course, and to regard the costs as investments, not as money down the drain. We need to do today the things that will make our work easier tomorrow.

The logic behind an M&A is that you’re buying a going concern, not a limited company.

— You need to look under the skin and understand what lies inside, particularly when you’re valuing the operations. And this is truer today than ever, given that uncertainty levels are so high, and given the geopolitical climate, the economic climate, and climate change.

 

So how do you know when you’ve hit the jackpot?

— You know. If you have the knowhow, if you’ve been thorough, and if you’re one step ahead, if you’ve taken on board the core aspects, and the legal, financial, and organizational issues, then you know.

 

Tomas’ 3 tips for M&As – where the opportunities and risks lie:

  • No skeletons in the closet. You need to do your due diligence well. Which means that every single relevant financial document must be reviewed before the M&A goes through.
  • Don’t be too eager. Let it take the time it takes. Don’t just charge in and stamp your logo on the acquisition object’s offices. Make haste slowly is a very sensible strategy if you want to successfully realize the synergies.
  • Share expertise and networks. In an ideal world, a big company buys up a smaller one that gains access to the purchasing company’s networks and expertise. The purchasing company, in turn, gains creativity and new energy from the smaller company.

 

About the program

Growth through Mergers & Acquisitions is aimed at anyone interested in learning more about the entire M&A process – before, during, and after the transaction. The program looks at central issues in connection with mergers and acquisitions, such as legal aspects, synergy issues, valuation issues, financial aspects, and integration issues.

Upon completing the program, you will understand the stages of the M&A process, be able to identify legal opportunities and limitations in M&A situations, understand what is required to create added value in a merger or acquisition, be familiar with the methods of valuing a merger or acquisition object, be able to analyze the effects of mergers and acquisitions in accounting terms on the Group’s profitability and financial stability, and to analyze organizational integration issues after the merger or acquisition has occurred.

Would you like to know more about the program?

For more information, please contact our program advisors.

 

Viktoria Norell
Account Manager

Phone: +46 8 586 175 40
E-mail: viktoria.norell@exedsse.se

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