Types of Successful Acquisitions

While every company involved in a merger or acquisition endeavors to ensure that it will be profitable, many of these transactions are not as successful as the companies involved would have liked. Certain companies that have been through multiple acquisitions, such as IBM, Cisco, Johnson & Johnson and SABIC, have used their experience to perfect strategies for successful acquisitions . In order to prepare for a successful M&A transaction and create future value, companies would be wise to follow the example set by these companies in order to develop effective strategies of their own.

Common Problems in M&As

Both before and after a merger or acquisition, companies are frequently unsure of exactly how to maximize the value of the acquisition. In some cases, skills and technologies required for a successful transaction are not mastered quickly enough, and the company’s revenue suffers as a result. In other cases, companies are simply unaware of how to create value following the transaction.

Creating Value

In order to maximize the creation of value from the transaction, companies need to use time-tested strategies that other experienced organizations have discovered. Companies should analyze, evaluate and compare a variety of strategies and their possible effects. In general, the acquiring company’s rationale for the transaction should align with one of the strategies below:

1. The merger or acquisition should improve the performance of the target company.

Acquisitions with the goal of improving the target company’s performance can be successful, especially if the company has low margins to begin with. This type of acquisition usually involves margin improvement through reduced costs and is common among private equity firms.

2. The merger or acquisition should remove excess capacity from the industry.

Combining mature companies with recent entrants can reduce excess capacity within an industry, thus leading to better productivity. In most cases, this type of acquisition is most beneficial to the seller’s shareholders.

3. The merger or acquisition should accelerate market access.

In many cases, small companies don’t have the resources necessary to promote and distribute their products efficiently. Acquisitions with the goal of accelerating market access can solve this problem by combining a larger company’s expansive resources with the innovative products of a smaller business.

4. The merger or acquisition should decrease costs related to skills and technologies.

Some acquisitions are successful because they give the acquiring company access to needed skills or technologies. These transactions are most successful when they reduce the cost or the time involved in obtaining these assets.

5. The merger or acquisition should help winners develop their business.

A final type of successful transaction involves identifying a company that has potential when it is early in its lifecycle and acquiring it before it achieves growth. This type of acquisition allows the acquiring company to cash in on the potential of the smaller business.

Simplify Acquisitions with ShareVault

Regardless of your goals for an acquisition, a thorough due diligence process is essential to the transaction’s success. ShareVault provides a secure, cloud-based solution that allows companies to share confidential corporate data with potential acquiring organizations. ShareVault is consistently ranked as extremely secure, user-friendly, easier to deploy, and more cost-effective than its competitors. In addition to offering bank-grade security and granular document access control, ShareVault offers detailed reporting of who has seen which pages of which documents, when, and for how long. Thousands of companies have used ShareVault in 45 countries worldwide facilitate more than $25 billion in deal transactions. Visit http://www.sharevault.com today to learn more.

Tips to Succeed After an M&A

Due diligence has been completed, all of the documents have been signed and the money has been transferred, but the M&A process isn’t over yet. Even after meeting all of these milestones, you will still face certain challenges as the company eases into new ownership. Anticipating and preparing for these issues in advance will help make this transition as painless as possible.

Preparing for Success

To understand the best way to prepare for the aftermath of a merger or acquisition, think about some of the companies that have done well after an M&A. What qualities do they share? In general, these companies have three things in common:

  • Strong leadership.
  • Clear, open communication.
  • Gradual changes made in the best interest of the company.

In many cases, organizations that are negotiating a merger or acquisition don’t stop to think about what will happen after the deal is done, and those organizations that do anticipate problems often focus all of their attention only on legal and financial issues. However, you may face a variety of other challenges following a merger or acquisition, including the loss of key personnel, low morale and other employee-related issues.

Damage Control

The most effective strategy for dealing with these issues involves planning for them long before you even begin the due diligence process. For best results, anticipate any issues that could occur after the M&A is complete, and formulate a plan for resolving them and/or minimizing their negative effects.

For example, to make the merger/acquisition easier on the staff, maintain open communication with employees throughout the M&A process. Let employees know how the potential merger could affect them, and allow them to voice any concerns they may have about the process. Do your best to make sure that all employees feel comfortable asking questions and sharing their concerns. Respond to their feedback with compassion and understanding. Determine in advance who will take on which roles after the companies merge, and make employees aware of your plans.

A Smooth Transition with ShareVault

M&A deals enjoy greater success when the organization negotiating the deal gains a thorough understanding of the long-term impact the M&A will have on employees and stakeholders alike. In most cases, this understanding comes from effective due diligence. ShareVault simplifies the due diligence process by allowing organizations to share confidential corporate information with potential partners in a secure environment.

ShareVault has demonstrated that it is a leader in terms of its ease of use, speed, security and reliability. With ShareVault, you can maintain all of your corporate documents securely in a single cloud-based location while still retaining control over who can see, save and print each of the documents in your database. ShareVault also allows you to monitor all users’ behavior so that you know who views each page, when it was viewed and how long it was open. What’s more, ShareVault even allows you to revoke access to documents even after they have been downloaded to an end user’s device or computer.

Long-range planning is essential for M&A success. ShareVault facilitates thorough, effective due diligence so that you can make the right decisions during every phase of the M&A process.

Real Estate and M&A Deals

As the economy has improved and credit has become more readily available, mergers and acquisitions (M&A) are on the rise. Many business owners, however, may find themselves unprepared to participate in this resurgent environment. Those business owners who want to be prepared for a potential merger or acquisition should spend the time to reevaluate what factors drive their business’s growth, revenue and costs—and in turn, profits—especially in the changing business climate following the economic downturn.

Though they are often underestimated, a business’s real estate concerns are an important factor to consider while preparing for a potential merger or acquisition. In the course of valuing their business, owners may consider the value of owned real estate assets, as well as their real estate liabilities (such as a lease or loan balance). However, there are other aspects of real estate that they may easily overlook.

The market value of their real estate assets may be much higher than the actual price at which they could sell them on the market. If the location of the business is especially advantageous for their particular business, and difficult to find elsewhere, an acquiring company may pay much more than the market value.  For example, a restaurant that has been located at a certain location for many years may not do as well if relocated. Similarly, a business that is located in a part of town where its ideal customers walk or drive by frequently may also sell for more than the value of other similar structures nearby.

Liabilities may also be lower than they may first appear. For example, a buyer may be more willing to pay a higher price for your business if you have locked in a long-term lease at a favorable rate. Or you may be able to roll over a loan at a low interest rate.

In addition to putting thought to the value of your real estate in advance of a potential M&A deal, it is also crucial to organize all of the documents that are instrumental in demonstrating the full value of your business. If business owners prepares these documents in advance, they will have more leverage in negotiations should an M&A offer materialize, and they are in a much better position to attain the highest possible selling price for their business.

The best way to organize documents for due diligence analysis is in a cloud-based repository that is not only extremely secure, but also easy to use. If you store confidential documents within an organized file structure that also allows you to tag each document with appropriate descriptions, it will make it much easier for potential partners or acquirers to find what they are looking for, and you can restrict access and the ability to print and save to only the people you select.

Moreover, you ideally will be able to identify exactly who has viewed which documents, when they viewed them, and for how long they viewed them, in order to understand which buyers are most interested and why they may be interested on the one hand, or concerned about certain issues, on the other.

With more than 1,000 companies that have trusted its secure document sharing solutions, ShareVault has facilitated billions of dollars in successful deal transactions. ShareVault combines the speed and simplicity of a cloud-based document sharing solution with the security and reliability of a virtual data room.

Prepare yourself early for a potential M&A by taking accurate measure of your assets and liabilities—real estate included—and by organizing all of the documents a potential acquirer would want to see before the offer comes along.

BIO 2014 Conference in San Diego June 23-25 – Come See Us!

ShareVault will be attending the upcoming BIO International Convention June 23-26, in San Diego, California.BIO International Convention Logo

As the Official Virtual Data Room Provider for  Biotechnology Industry Organization (BIO), ShareVault will be in the  the BIO Partner Pavilion Booth #4317.  Please stop by to visit and be sure to enter the BIO Business Solutions Raffle Drawing with a variety of exciting prizes including an iPad mini, an Apple TV, gift cards and more!

At the ShareVault booth, we’ll be distributing our very popular whitepapers, including the biopharma partnering series, and another focused on M&A preparation.  This content is extremely relevant all companies in Life Sciences.  For the biopharma partnering series, ShareVault worked with Linda Pullan (www.pullanconsulting.com), a well-known business development consultant.

At our booth, ShareVault staffers will be on hand to talk about how ShareVault can help accelerate your partnering activities including special features that support efficient and secure sharing of electronic regulatory submissions such as IND’s, NDA’s and MAA’s, while also making them easy for your users to navigate.

See you in sunny San Diego!

Preparing for Sell-side Due Diligence

Sell-side due diligence is the process by which a seller takes a critical look at their own financial position and assesses the opportunities and risks that their company may face prior to a sale. This includes analyzing the quality of historical earnings of the company, assessing capital requirements and tax risks, and understanding the relationships between the company and customers, vendors and other connections.

Sell-side due diligence preparation is especially necessary if:

  • The strategy of a company involves selling all or a part of the business (typically a high-value asset such as a division, a product line, valuable intellectual property, or the entire business).
  • The company seeks to maximize the value returned to owners, shareholders and other stakeholders.
  • The company wants the process of buy-side due diligence – as prospective buyers evaluate their assets or entity – to go smoothly and minimize any downstream legal ramifications stemming from inadequate disclosure.

Your business can receive many benefits from sell-side due diligence preparation. When a technical accountant or financial advisor examines and helps you prepare your financial statements, you can discover any adjustments that may be needed in order to ensure that your accounting policies meet business standards, which will help improve the overall financial image of your company. Reviewing your financial documents can help you uncover any potential concerns that a buyer may have about your company before they discover these issues themselves during their due diligence process.

Through sell-side due diligence, you can also anticipate any concerns the purchaser may have. The buyer may come forth with difficult questions or concerns involving operations, customer relation, or goals/projections, and they will expect a plausible response from business owners. By dealing with these issues in the first place during the sell-side due diligence process, you can prepare yourself to respond quickly and convincingly. Providing credible and accurate data, and being open about any potential problems that you have found, will prove to the purchaser that you can be trusted as a business owner and that your goal is to manage the sale smoothly and efficiently.

Sell-side due diligence preparation will also ensure leverage in your negotiations during the sale of your business. Experts in due diligence will commonly put together a final report of due diligence that outlines their findings and analyzes any issues they have discovered. When you perform sell-side due diligence and prepare your documents in advance, more in-depth information can be shared with interested buyers. This will give confidence to potential buyers in submitting their bids, thus creating a competitive bidding environment between them and other buyers. By being prepared in advance, you can attain maximum value return in the sale of your company’s assets.

ShareVault is NOT vulnerable to #HeartBleed Bug

Our customers are asking if ShareVault is vulnerable to the #HeartBleed bug. The answer is that ShareVault is NOT vulnerable to the bug. We did not need to change anything in ShareVault to respond to this bug because no vulnerability was detected at the time that the vulnerability was reported. The result of the heatbleed bug vulnerability test can be found here:

ShareVault not vulnerable to heartbleed bug

ShareVault not vulnerable to heartbleed bug

 

ShareVault.net is safe from this exploit because it employs a version of OpenSSL which is not vulnerable to the bug.

This is good news for ShareVault customers who trust us to securely share sensitive business documents for a variety of critical business processes.

 

Learn More About ShareVault Security