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How do I know it’s the right time for an M&A move?

On Behalf of | Jan 28, 2016 | Mergers & Acquisitions

Many in Louisiana may be of the opinion that mergers and acquisition activity is something restricted to the highest echelons of the corporate business world. But those with experience in business formation, planning and control know that M&A decisions happen all the time and can involve small and medium sized companies as well as the big ones.

It is widely recognized within business circles that all businesses follow a particular life cycle. The phases are simple to identify. The first is the concept and startup stage. Growth follows. Eventually a company reaches maturity and gradually slips into decline. At some point, a fork in the road appears. One route leads to closing the business. The other typically involves M&A and with the sale comes hope of a new life.

If you’ve read this far the next question you may be asking is how do I know which way to go when I hit that fork? Put another way, what conditions should exist to think about a merger and acquisition.

Following are some of the most common reasons business might need to consider M&A activity. As we mentioned in previous post, growth is usually the overarching reason for M&A. But growth can come in many forms. By taking over a business that is similar to your own, you might be able to grow sales. By taking over a competitor, you may be able to grow market.

If you happen to be at a point where you have surplus cash available, an advantageous merger or acquisition could yield growth in return on investment.

If your company is in the decline phase of the life cycle, you might determine that partnering or selling might be needed to ensure survival.

Regardless of timing or the reason, you will want to work with skilled counsel to be sure you have the proper level of detail and flexibility to achieve your desired outcome.