When it comes to acquiring or merging a business with another, it’s imperative that decision-makers know why they’re pursuing a deal and its potential impact on the company, good and bad.
Mergers and acquisitions (M&A) may indeed be the best route to success, but there’s a lot of room for problems, and many leaders underestimate the role in-house legal teams can play in mitigating these problems and facilitating progress until they’re locked into a deal.
And that’s when issues become much more difficult to resolve and plans unravel.
Your in-house legal team should be held accountable for catching things specific to your business that outside attorneys will miss.
While a CEO and board might fully appreciate in-house counsel, it’s equally important the team is supported across a company — from marketing to product development — in order to ensure an efficient closing and successful integration. The best way to do that is by bringing in-house counsel into the process early and often.
Outside attorneys can be experts in M&A, initial public offerings (IPOs), venture financing, transactions involving special-purpose acquisition companies (SPACs), etc., but it’s important to remember your in-house lawyers are the experts on your company.
As such, in-house legal leadership must understand both the business and the legal implications of a contemplated transaction, as well as how the process of entering and ultimately closing the transaction can impact operations. A clear understanding of the business operations, the end strategic goal of the transaction, and the technical aspects of the deal itself is critical in anticipating and resolving business-critical issues.
Here are a few insights executives and legal team leaders should keep in mind as M&A, or any major strategic transaction, evolves from business agreement to closing and through integration.
Question and answer
It sounds basic, but the first step is to make sure all agree the deal is the best strategy for reaching specific business objectives. Will it allow the company to scale faster? Will it create a more diverse, yet complimentary, product portfolio? These are the types of questions that need to be asked and answered, as these will not only justify the deal, but also help to set high-level goals and objectives associated with the transaction.
Once the team has settled on a transaction, tactical planning on how to carry the transaction (and the parties) from business deal to close and integration must be addressed. How will you bring the organizations together? Do you have a plan that’ll take you from closing the deal to achieving the strategic goals of the transaction? Is there alignment on product direction, go-to-market strategies, staffing, company culture?