M&A activity tends to be driven by favorable market conditions, but that drive really begins with broader strategic objectives that are complementary among the parties in the M&A transaction. The objectives of the buyer and the seller come together in a way that propels the transaction forward.

For example, one or both organizations may need the M&A in order to survive; or perhaps the move will enable a leaner, more profitable company; or it will better position the resulting company for necessary growth in an increasingly complex global marketplace.  Each year we see more fragmented industries like staffing, banking and the airlines to name a few who are consolidating for these reasons.

Why Consider an M&A Transaction?

There are many strategic reasons why mergers or acquisitions are considered in the first place, and include:

· To gain economies of scale

· To increase financial growth

· To achieve vertical integration

· To eliminate competition

· To acquire new assets

· To hedge a counter-cyclical business

· To gain Intellectual Property (IP)

· To expand into new markets

· To expand into complimentary products and services

· To eliminate emerging IP and product threats

· To acquire new customers

The need or desire to acquire or merge is always present in the business world but the challenges are many. Given the need that most corporations (and all publicly owned entities) have to grow; the two commonly recognized methods of growth are to build or buy (both have their challenges); the urge to merge or acquire will always be present in the business world, so how can it be done successfully?

Many questions should be addressed by Acquirers'

1. How will you operate post-acquisition?

·        Should the acquired company be fully integrated? or

·        Allowed to operate partially or totally autonomously?

Considerations:

·        Allowing the acquired company to remain separate can certainly be advantageous in some situations due to the lesser degree of complexity required, but the reasons behind the acquisition may dictate integration.

·        If separate, can they cross sell to each firm's customer base?

·        If cross selling is the intent, how will sales and marketing be cross-trained and educated on the benefits? 

·        If combined, is there elimination of duplication of effort?

·        Is there commonality in approach and style across both companies?

·        Can two distinctive cultures be effectively integrated?

·        Would integration hamper the entrepreneurial spirit of the acquired company?

2. How will you brand the acquired entity?

·        Often the answer to the first question will dictate the second.

3. What are our objectives in making this acquisition?

·        Choose from the list of reasons for transactions above.

4. How can we ensure a successful Acquisition?

·        Non-intrusive integration is the key to success.

5. How will we communicate any necessary changes?

·        The key to successful integration is continual and honest communication-no surprises is a good objective.

To retain the support of shareholders, lenders and other stakeholders most companies need to increase profits and often but not always that requires growing sales. Building new business can be costly, time consuming and more risky than poorly thought out acquisitions, however a well designed and implemented acquisition strategy can accomplish growth goals in less time and at lower comparable costs.

The need to survive, expand services and be better able to provide for the growing needs of their customers will continue to propel staffing M & A for years to come. Staffing operators who learn how to master M & A will be the new industry leaders.

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Click here to contact Sam or Bob who have successfully completed over 120 staffing industry transactions.

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Bob Cohen                                             Sam Sacco

Partner                                                    Partner

R. A. Cohen Consulting                         R. A. Cohen Consulting

(416) 229-6462                                      (910) 509-0691

bob@racohenconsulting.com                sam@racohenconsulting.com

Contact Sam or Bob, who have successfully completed over 120 staffing industry transactions, if you'd like to discuss M & A matters related to your staffing firm.

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