Mergers & Acquisitions (M&A)

The takeover and integration into your own business world or merger of a company should fundamentally be a worthwhile business for the takeover. However, at the same time it is a very complex and challenging undertaking. While successful mergers and acquisitions (M&A) can result in significant growth and competitive advantages (which are often no longer achievable through generic growth), the process itself is fraught with significant potential pitfalls.

IQX GROUP has an exclusive pool of experts and former executives who can use their experience to effectively address the key challenges companies face during acquisitions and mergers.

your contact

Reinhold Trummer

+43 676 677 30 85
This email address is being protected from spam bots! To display JavaScript must be turned on.

A challenge of cultural integration

One of the biggest hurdles in any merger is the integration of different corporate cultures. Different leadership styles, values and expectations of employees can lead to conflicts and reduced work morale.

The IQX GROUP carries out a thorough cultural assessment during the due diligence phase. Together with the potential transferee and the potential transferee, we develop a comprehensive integration plan that includes strategies for cultural alignment, team building activities and consistent communication. This makes it possible to clearly identify - expected - gaps in cultural integration before the acquisition, to have plans available and to close them after the acquisition has been completed.

Overcoming the challenge of the complexity of due diligence

Inadequate due diligence can lead to unforeseen liabilities, overvaluations and missed red flags that can jeopardize the success of the deal.

We see it as extremely important to use a multidisciplinary team of experts in due diligence that includes financial, legal, operational and cultural (change) experts. In addition to the huge amounts of data that have to be sifted, identifying risks in the company to be taken over is the key success factor:

e.g

Risks in ongoing projects that are in product development (technical feasibility unclear, delays, specifications requirements not met, ...)
Risks with current products (complaints, lack of sustainability, ...)
Risks related to employee skills (bundling essential skills among a few employees)
Risks in the plants (pollutants, systems and machines at the end of their life, ...)
Utilization risks in the future

The complexity of due diligence fundamentally requires a very well-planned approach. We at IQX have a very detailed “Due Diligence Criteria Catalog” to cover all questions that need to be clarified in the various specialist areas.

“Classic” phases of due diligence

1. The strategic planning of the takeover

The reason for the takeover: Formulation of the reasons for the takeover, such as: B. expanding market share, acquiring new technologies or diversifying product lines.
Establish a catalog of takeover goals: Clear (also quantitative) description of which goals are to be achieved with the takeover, and “cross-check” how well these correspond to the strategic goals that have been set so far - within your own company.

2. Careful execution of due diligence

Financial Due Diligence: Analysis of the financial world of the target company à analysis of annual financial statements, cash flow, P&L, liabilities, assets, product results calculations, ...
Operational Due Diligence: Analysis of the status and, more importantly, the risks in the operation, including the supply chain, manufacturing processes and technology. Often the cause of failures in companies being taken over is a “massive underperformance” of the operational activities.
Legal Due Diligence: Analysis of all legal aspects, including contracts, intellectual property, liabilities and regulatory compliance.
Cultural due diligence: Understanding the corporate culture of the company being acquired, especially in order to anticipate integration challenges.

3. Evaluation of the company to be taken over

Carry out valuation: Use of various methods in coordination with the potential buyer (e.g. discounted cash flow, comparable company analysis) to determine the fair value of the target company.
Negotiate purchase price: Conduct negotiations between buyer and seller to agree on a purchase price that reflects value and potential synergies.

4. Finding the right financing for the acquisition

Development of financing options: Development of financing scenarios on how the acquisition should be financed, be it through cash reserves, debt, equity or a combination of both.

5. Making suggestions for structuring the business

Deal structure: Develop proposals for the structure of the deal, e.g. B. an asset purchase, a stock purchase or a merger.

6. Support with the necessary official approvals

Antitrust and Regulatory Clearance: Assist in ensuring compliance with antitrust laws and any other necessary regulatory approvals.

Challenge of financial and operational integration

Financial and operational integration after acquiring a company can pose massive challenges. Differences in financial reporting, IT systems and operational processes can lead to long-term delays in collaboration and massively slow down the realization of synergies.

It is therefore essential for the IQX GROUP to develop a detailed integration plan as part of the due diligence that focuses on the harmonization of financial systems, IT infrastructure and operating processes.

Corresponding expected costs must be included in the overall assessment of the purchase price.

Challenge of employee retention and morale

The uncertainty and changes during a merger can cause anxiety among employees - this can lead to reduced productivity and high turnover. Therefore, after acquiring the company, it is essential to set up a communication management system that is specifically geared towards integration and that transparently reports to employees about the advantages and effects of the merger.

Challenges of realizing synergies

Realizing expected synergies from the merger, such as cost savings or sales increases, is often more difficult than expected.

As already mentioned above, the development of an exact integration plan during the due diligence is crucial in order to actually achieve the set synergy goals.

This plan must also include the necessary capacities and skills for the integration - experience shows that these are often significantly higher than the costs of actually acquiring the company.

Challenge of stakeholder management

Managing the expectations and concerns of various stakeholders, including shareholders, customers, suppliers and creditors, can be challenging and requires intensive communication during due diligence and integration/merger. The main thing is to build trust and support for the planned deal.

As shown, it is important for acquirers to take a holistic approach and take cultural, financial, operational and regulatory aspects into account at the same time in order to actually manage the complexity of mergers and acquisitions effectively. By addressing these challenges head-on and with strategic foresight, companies can realize the full potential of their mergers and acquisitions.