The success of any deal depends on a number of factors. One of the most important ones is whether the company’s financials and projections are sufficient to support the deal in the long haul. A strong balance sheet and a steady increase in revenue are good indicators. Other indicators include cultural compatibility, the capacity to scale operations, and the presence intellectual property such as patents and trademarks.
A successful deal also depends on a meticulous plan and execution. A thorough due diligence process can assist in identifying possible roadblocks and pitfalls, which can be addressed well in advance of the closing. This is particularly crucial for deals involving a significant purchase of stock or cash.
An effective approach to deal sourcing is to build and maintaining a strong network of investors and industry professionals. These relationships can provide you with early access to a variety of off-market opportunities. For instance a real estate agent might establish relations with investors and brokers to gain access to commercial properties before they are available on the market.
Acquirers often gauge deal success against the targets they set for the business which was acquired, such as synergy gains and growth in revenue. These goals are usually met or even exceeded by the acquirers, which encourages them to believe that they have made a difference. But, this can cost the company that’s already in operation, and may struggle to perform in the manner expected after the acquisition.