Mergers & Acquisitions (M&A)

The acquisition and integration of a company into one's own business, or a merger, should generally be a profitable venture for the acquiring company. However, it is also a very complex and challenging undertaking. While successful mergers and acquisitions (M&A) can lead to significant growth and competitive advantages (which are often no longer achievable through organic growth), the process itself is fraught with considerable potential pitfalls.

The IQX GROUP has an exclusive pool of experts and former executives who, with their experience, can effectively tackle the key challenges that companies face during acquisitions and mergers.

Your contact

Reinhold Trummer

+43 676 677 30 85
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Future-oriented operational design as the key to M&A success

At IQX, our focus in an M&A project is not only on the transaction itself, but above all on the future design of operations. The long-term success of an M&A depends significantly on how well the operational processes function after integration.

We recognize that simply merging two companies legally and financially is not enough – the real challenge lies in creating synergies and streamlining operational processes. Therefore, we analyze the existing structures of both parties early on and develop solutions that ensure seamless continuation of day-to-day business operations after the acquisition. Our goal is not only to achieve short-term efficiency gains but also to lay a solid foundation for sustainable growth and successful transformation.

Through our expertise in operational integration, we create a clear roadmap that ensures long-term value creation, minimizes risks, and simultaneously opens up opportunities for innovation and efficiency. In this way, we ensure that the M&A transaction delivers maximum success not only today, but also in the future.

A challenge of cultural integration

One of the biggest hurdles in any merger is the integration of different corporate cultures. Differing leadership styles, values, and employee expectations can lead to conflicts and decreased morale.

The IQX GROUP conducts a thorough cultural assessment during the due diligence phase. Together with both the potential acquirer and the acquired company, we develop a comprehensive integration plan that includes strategies for cultural alignment, team-building activities, and consistent communication. This allows us to clearly identify any anticipated gaps in cultural integration even before the acquisition, to have plans in place, and to address these gaps after the acquisition is completed.

Overcoming the challenge of the complexity of due diligence

Insufficient due diligence can lead to unforeseen liabilities, overvaluations, and overlooked warning signs that can jeopardize the success of the business.

We consider it extremely important to employ a multidisciplinary team of experts in due diligence, including finance, legal, operations, and cultural (change) specialists. Besides the vast amounts of data that need to be reviewed, identifying risks within the target company is the key success factor

e.g.

Risks in ongoing projects that are in the product development phase (unclear technical feasibility, delays, specifications not met, …)
Risks associated with existing products (complaints, lack of sustainability, etc.)
Risks related to employee skills (concentration of essential skills in the hands of a few employees)
Risks in the plants (pollutants, equipment and machinery at the end of their service life, …)
Future capacity utilization risks

The complexity of due diligence necessitates a very well-planned approach. At IQX, we have developed a highly detailed "Due Diligence Criteria Catalog" to address all relevant questions across the various specialist areas.

"Classic" phases of due diligence

1. The strategic planning of the acquisition

The reason for the acquisition: Statement of the reasons for the acquisition, such as expanding market share, acquiring new technologies, or diversifying product lines.
Define acquisition target catalog: Clear (also quantitative) description of which goals should be achieved with the acquisition, and a "cross-check" of how well these match the strategic goals previously defined in the company.

2. Careful execution of due diligence

Financial Due Diligence: Analysis of the target company's financial situation, including analysis of annual financial statements, cash flow, profit and loss statements, liabilities, assets, product income statements, etc
Operational due diligence: Analysis of the status and, above all, the risks in the operation, including the supply chain, manufacturing processes, and technology. Often, the root cause of failures at acquired companies lies in a "massive underperformance" of their operational activities.
Legal Due Diligence: Analysis of all legal aspects, including contracts, intellectual property, liabilities and regulatory compliance.
Cultural due diligence: Understanding the corporate culture of the company to be acquired, primarily to anticipate integration challenges.

3. Valuation of the company to be acquired

Conduct valuation: Use of various methods in coordination with the potential buyer (e.g., discounted cash flow, comparable company analysis) to determine the fair value of the target company.
Negotiate purchase price: Conduct negotiations between buyer and seller to agree on a purchase price that reflects the value and potential synergies.

4. Finding suitable financing for the acquisition

Developing financing options: Developing financing scenarios for how the acquisition should be financed, whether through cash reserves, debt, equity or a combination of both.

5. Submitting proposals for structuring the business

Deal structure: Developing proposals for the structure of the deal, e.g., an asset purchase, a share purchase, or a merger.

6. Assistance with obtaining the necessary official permits

Antitrust and regulatory approval: Support in ensuring compliance with antitrust laws and all other necessary regulatory approvals.

The challenge of financial and operational integration

The financial and operational integration following the acquisition of a company can present significant challenges. Differences in financial reporting, IT systems, and business processes can lead to long-term delays in collaboration and severely slow down the realization of synergies.

For IQX GROUP, it is therefore essential to develop a detailed integration plan during the due diligence phase, focusing on the harmonization of financial systems, IT infrastructure and operational processes.

The corresponding anticipated costs must already be factored into the overall assessment of the purchase price.

The challenge of employee retention and morale

The uncertainty and changes during a merger can lead to employee anxiety, which can result in decreased productivity and high turnover. Therefore, it is essential to establish a communication management system specifically focused on integration after the acquisition, one that transparently informs employees about the benefits and impacts of the merger.

Challenges of realizing synergies

Realizing expected synergies from the merger, such as cost savings or revenue increases, is often more difficult than expected.

As mentioned above, developing an exact integration plan during due diligence is crucial in order to actually achieve the set synergy targets.

This plan must also include the necessary capacities and skills for integration – experience shows that these are often significantly higher than the costs of actually acquiring the company.

Challenges of stakeholder management

Managing the expectations and concerns of various stakeholders, including shareholders, customers, suppliers, and creditors, can be challenging and requires intensive communication during due diligence and integration/merger. The primary goal is to build trust and support for the planned deal.

As illustrated, it is crucial for acquiring companies to adopt a holistic approach, considering cultural, financial, operational, and regulatory aspects simultaneously to effectively manage the complexities of mergers and acquisitions. By addressing these challenges directly and with strategic foresight, companies can unlock the full potential of their mergers and acquisitions.