Measuring the Success of M&A Deals
Measuring the results of a merger or acquisition transaction is just as critical, if not more so, than valuing and structuring the deal up front. "Tracking the target's performance in the areas of financial, personnel and client provides an honest assessment of whether or not the deal is meeting everyone's expectations and what corrective steps may need to be taken," says Steve Gido, CFA, a principal with management consultant firm ZweigWhite who specializes in financial advisory services.
Steve shares a few tips for firm leaders on measuring the success of a deal:
Align the IT and financial reporting systems. Once integrated, communicate near-term financial goals to both buyer and seller to manage expectations. The buyer should continually measure their investment in terms of standard corporate finance ratios to determine what level the target's future cash flows will validate the purchase price.
Retain and motivate staff. It is important to retain the next generation of leadership that will drive the long-term success of the combined firm. The buyer should form an integration team to build cultural bridges and provide a concise explanation of any changes in benefits and rewards programs to the seller's staff.
Get clients on board with the deal. Communicate the advantages of the combination to the most valued clients by going on a marketing “road show” to introduce the buyer's leadership, convey the merits of the new acquisition and assure them that when it comes to their existing project requirement and future needs, it's business as usual.