Month: April 2023
The cost of capital is low and your company made it through the recession. Now may seem like a good time to buy but youre scared off by the high business mergers and acquisitions failure rate. Studies conducted in the late 1900s and early 2000s show that M&A failure rate hovered around 70%.
However, recent results project an upward trend. According to Bain & Co, only 30% of M&As underperform, down from 50% of previous years. While the science of predicting the success (or failure) of M&A may seem hypothetical, there seem to be factors that hinder or help M&A.
Integration program
Budgets and people dont integrate themselves. Before the deal closes, its important to have a detailed integration plan that covers all facets of the organization. Moreover, first steps towards integration should be taken before the ink dries. Combining synergies on paper is easier than doing so in practice, but cultivating and maintaining processes should smooth the transition.
Target sighting and metrics
M&As with synergy targets and metrics in place have a better chance at succeeding. Collecting, analyzing, and presenting data on a regular basis lets the board know if the unit is growing according to plan or if actions need to be taken to correct missteps, should growth plateau or slow.
Maintaining business intelligence
Loss of key people has a definite impact on the future performance of the merged entity. Its important that new organizational structure and leadership is set early in the integration process to prevent business intelligence from literally walking out the door.
Protect your base business
While its important to have a smooth transition process, getting work done should still be top priority. Management shouldnt be distracted by M&A activity. They should be vigilant against competitors who may try to take advantage of the flurry of activity and present a unified front to customers despite gaps in the integration.
Lack of due diligence
Performing proper due diligence can unearth factors such as pending law suits, outstanding tax debt, and extreme vulnerability to litigation that can dissuade a potential buyer. A thorough background check can protect your base business and can save you time and money.
Relative Size
A significant difference in size between the acquiring and target company has been found to be a factor in poor acquisition performance. M&A can flounder if the divested company is too large to manage or if smaller acquisitions dont receive the time and attention they required.
Cultural Differences
Salient differences in corporate culture is another factor that can hamper the chance for success. When a company is acquired, the decision is typically based on product or market synergies, “soft factors” that can be overlooked with the assumption that personnel issues can be overcome. While cherished aspects of a work environment may seem petty compared to the bottom line, their removal may result in resentment, productivity decrease and loss of key employees.
Business Merger and Acquisition Experience
While previous M&A experience is not a necessary requirement for success, it does help when detecting red flags and creating and implementing a better integration plan. If this is your first M&A, seek the advise of expertise of knowledgable professionals.
Proformative.com is a free, open and independent community of corporate finance, accounting, treasury and related professionals that offers a wealth of expert advice, information and accounting resources . Finance forums like Proformative allow you to learn about M&A and other relevant issues important to finance, accounting, and treasury experts.
Many companies are turning to website design that incorporates ecommerce functionality. It seems like it should be fairly simple. All they need to do is decide which products to sell and put up a few pictures and then they can sit back and watch the revenues come in. Unfortunately, this has led to the failure of many ecommerce sites. Here are some of the top mistakes that companies make when it comes to ecommerce website design.
They do not make their site easy to navigate
Many companies make it very difficult for customers to find their products. They either do not have a functioning menu that allows customers to find specific products or they make that menu very difficult to find. If customers do not have a clear path to the items that they are looking for they are unlikely to spend a lot of time looking for them. This means that you will end up losing potential customers to your competition and this can lead to the failure of an ecommerce site much more rapidly than you may think possible.
One possible fix for this problem is to include a search feature in your website design. By providing a way for customers to get directly to specific items you will make your website design much more efficient and this can help you get the kind of revenue you have been hoping for.
They do not have a fully functioning shopping cart or payment solution
When trying to entice customers to purchase goods online your website design has to include a fully functional shopping cart and payment solution. There is nothing more frustrating than trying to select products and finding it impossible to do so. It can cause you to lose customers very quickly and again, this can cause an ecommerce website to fail. You also need to make sure that once the customers have found the products they are looking for that they can check out and pay as quickly as possible.
If you ensure that your shopping cart and payment areas are easy to find, simple to use and functioning properly you can quickly increase the amount of revenue that your site is bringing in.
Customers cannot get a clear idea of what the items look like
Customers want to be able to tell what they are purchasing before they are willing to pay for it. You need to make sure that you are using a combination of clear, crisp photographs and descriptions that give your customers a clear idea of what they will be paying for. Be sure to include measurements and any options that a customer can choose from. Consider grouping like items together to make them easy for customers to compare.
In the past, when digital photography was just getting established it was more acceptable for the images to look grainy or unclear. This has changed. Digital photography has progressed so far that there is no reason why an ecommerce website design cannot include high quality photographs.
By addressing these three top mistakes relating to ecommerce website design it becomes much more likely that your site will be a success and generate the kind of revenue you have been looking for.