Article #1: Establish a clear strategic vision and capability fit before engaging into an overseas M&A project
By Robert Yu, Partner China & Asia
When investing overseas, we all know that what works in the domestic market may not work in a foreign environment. However, in many cases, managers are driven by “opportunities” and can lose track of the strategic reasons to do the investment in the first place. In addition, many acquirers are not equipped with the right resources to execute the project, especially after the deal is signed and many risks start to come to light during the integration phase.
Seasoned and serial acquirers typically do the following to ensure M&A readiness:
- Establish a clear M&A strategy aligned with the company’s growth strategy
- Resource well before embarking on target searches
- Review their long-term growth plan
- Map out the needs that need to be filled by in-organic growth
- Clearly define M&A targets
- Fully align their M&A strategies
- Review their team strength and weakness for capability gaps
- Leverage external experts to fill the gap and enhance their internal teams
And finally, they make sure the combined M&A teams (internal and external) are experienced and/or trained to execute the global expansion.
A well-prepared M&A team can articulate exactly what synergies they expect to achieve, what profile they are looking for in a target, and what kind of risks are show-stoppers. If your M&A team is still telling your buy side advisory firms to go find a “good target” without a detailed profiling, then it would be a sign that you are not ready to start a cross-border project.