Learn the common mistakes made during the M&A process and how to get around them.
John Warrillow, founder and CEO of The Sellability Score, knows that the M&A process can lead to many pitfalls. In a post at Inc., Warrillow lists the four most common problems when it comes to growing by acquisition and provides the best ways around them.
Warrillow starts by pointing out that if you’re buying a very small business, then “structure things so that the owner gets paid largely for the future performance of the company,” rather than having to pay “a bundle of cash upfront.” After that, avoid being vague about “what support you are going to provide the target company to help them achieve the goals you agree upon.” Make sure you pick the right lawyer, and never underestimate the time and resources it will take to integrate the new company. The M&A process can “help companies of all sizes grow,” Warrillow writes, and by “avoiding some common pitfalls, you can make the deal work for both you and the seller.”