The simple answer to this question is usually when the need encounters the opportunity. Typically a need appears when a company’s management uncovers opportunities to gain or maintain a competitive advantage that can be accomplished by means of mergers and acquisitions.

As mentioned before, such opportunities can include an increase in production scale, improved and new product and service offerings, gaining improved capabilities, a better position in the value-chain and so on.

When the conditions in the markets show signs of positive activity, and financing alongside a suitable goal are both determined it can be stated that opportunity meets the need. As such the focus on timing is determined by the company’s tactical requirements and a target conducive to said requirements.

If a shift in market fundamentals occurs that is a result of technological advancements, globalization, regulatory changes or other such forces, M&A could become a crucial requirement. As an example, in the event of the industry converging, a company’s management could choose to become an early mover in order to avoid falling behind the pack.

In order to successfully carry out a transaction a plethora of resources are required to secure a favorable conclusion. Specialist expertise is necessary in the fields of finance, tax, accounting, law, project and risk management, etc., in order to successfully carry out policy integration and implementation along with due diligence.

Advisors that are specialized in a specific thematic area can fill the gaps if necessary. Given the fact that every business’ requirements vary, it is recommended to aim for advisors that provide a flexible business model that enables them to take part in mergers and acquisition transactions at any point of the deal process.

In the case of M&A transaction there are a number of aspects concerning regulations and taxes that require prompt tax and legal recommendations. Expert legal advice must be secured in the incipient stages of the process on the relevant laws and regulations that concern merger and acquisition endeavors in order to establish if regulatory filings or approvals are required. Amongst them are particular industry regulations, restrictions regarding foreign investors, securities legislation as well as labor laws and anti-monopoly laws.

From an industry point of view most of the new regulations that impact the financial services landscape have been carried our since the latest financial recession. Therefore, from a mergers and acquisitions point of view, far more rigorous capital requirements are necessary.

For international transactions it is necessary to establish as timely as possible if there are any types of antitrust concerns or other restrictions that can affect the M&A process, as filings thresholds tend to vary from one jurisdiction to another. As such any type of antitrust concern should be resolved with the appropriate authorities before initiating any international M&A transaction. Buyers are required to mention in their due diligence process a review for any bribery or corruption concern, with a specific attention granted to the implications of current local and global anti-corruption laws. In the event that any such concern is uncovered, legal advisors should offer their recommendation on the right solution with the relevant authorities and on how to manage the transaction.

From a taxation point of view, tax expertise should be secured in order to receive proper advice regarding the taxability of a transaction, the anticipated tax cost and if the deal can be constructed in a tax-mitigated fashion. As an example, taxes for transfers (such as VAT) are a crucial factor in determining whether to go ahead with a deal or otherwise as there are carry-over tax aspects that should be taken into consideration such as total assets and net operating losses alongside tax risks that may affect a buyer after the acquisition has been completed.

In order to enhance the tax benefits related to transaction debt financing, there is the possibility of constructing the deal to mitigate the debt financing as a means of mitigating the tax strain on the buyer by deducting interest.

Given the sophisticated nature of the mergers and acquisitions process mistakes are bound to occur. The most important outcomes of mistakes are the lack of ability to seize anticipated synergies, failure to perform in accordance with expectations, failure to hold clients and not being capable of maintaining profitable operations. Below you can find the most regular and costly errors that can result in such outcomes:

Insufficient planning – Inability to evaluate targets by means of relevant criteria consistent with value generating approaches and intended synergies.

Failure to timely engage in the discovery process – During this process time is the most valuable resource. Unless every consideration of the value proposal that backs the transaction are made evidently clear to every party involved in the deal within an equitable time frame, the momentum to finalize the transaction can slow down. From the buyer’s point of view, it is crucial to make use of information, resources and instruments in order to reveal all synergy savings, advantages and improvements to confirm the value proposal and progress the discovery process.

Insufficient due diligence – Nominal due diligence is vital to comprehending the entire image required to review a mergers and acquisitions deal. As an example this process can confirm expectations concerning anticipated expenditure and profit synergies and discover and evaluate their impact, offering a stimulus for savings pursuits as a significant aspect later in the integration stage. Likewise, it can also evaluate other aspects of the value proposal that are intrinsic to the deal. Proper due diligence also focuses on tactical, operational and IT areas of the business to uncover potential opportunities and liabilities. Due diligence can also bring to light regulatory and legal issues, help retain key talent, uncover vulnerable areas in a target’s financial balances, expose unnoticed risks and ongoing actions that are crucial to supporting operations.

Lack of information security – One of the most vital considerations of the introductory M&A process is efficiently securing data. It is strongly advised that buyers and sellers alike secure important business documents that carry sensitive information which could be leveraged for competitive advantage in the event of such information being accessed by a rival entity. Properly finalized mergers and acquisitions transactions represent the outcome of a thoroughly researched and disciplined approach to organizing business information. A part of this information should be made accessible to the parties that are involved; however, other documents that carry proprietary information should be kept aside for more seriously motivated contenders or the final buyer. A seller that fails to portion this type of sensitive information as the process progresses increases the possibility that vital data may be disclosed at an incipient and inappropriate stage, which in turn increases the likelihood that this information will fall into the hands of competitors.

Increased expenditure compared to real value – This mistake is the most common of all. The executive management can’t initiate the deal process unless it is prepared to renounce a target. Very few deals make sense to be closed unless the buying entity’s management has a fair opportunity to make the deal go through and earn an appropriate rate of return towards the shareholders’ benefit. It is not uncommon that incessant competitive bidding, management’s ambition to one-up a rival’s offer, or a high ranking executive’s resolve to make the deal go through, overwhelms clear and rational judgment that results in paying more than the true value of the target.

Lack of discipline and perspective based on unrealistic expectations – During the progression of the discovery process, predictions and estimates are made in regards to the value generated by the transactions pertaining to synergies, process effectiveness, development targets and profits. As such these predictions and estimates should be realistic in nature in accordance with available information and the risks that are associated. The deal needs to be reviewed in a stringently objective manner in order to clearly reflect the risks and rewards of the deal. When executive management is focused on a target and invests resources in the evaluation process and the negotiation of a deal, they cannot become emotionally attached in a manner that they forget to treat it as a regular business deal. In this respect strategy is much more significant than the target itself.

Inability to focus during the integration process – Integration plans should always be made prior to closing the deal, never afterwards. The timely development of integration plans should be highlighted in such a manner that will allow its immediate execution once the deal is closed. Business development and integration specialists should cooperate closely towards the rapid development of the plan in order to establish a distinct course of action with the necessary resources, key talent, accountability and time frames for accomplishing their goal. In order to achieve the anticipated synergies, level of efficiency and development, clearness and focus are key requirements.

Carrying out integration endeavors is a large-scale operation, requiring cross-discipline collaborations and the appropriate knowledge and resources responsible for outcomes to achieve a focused timeline. If any of these elements are engaged in other activities, carrying out the integration plan will be impacted due to insufficient attention. An objective-focused and time-efficient approach keeps professionals engaged, mitigating idleness and process fatigue. An established time span for completion determines more cross-discipline cooperation and engagement of operating staff, mitigating the number of missed opportunities and repetitive efforts. Regular integration meeting are a necessity in order to keep everyone informed, promote critical reasoning and to secure that critical decisions are taken at the right time and fast.

Post-acquisition issues due to not delivering on expectations – Assuming that predictions are of a realistic nature, merger and acquisition transactions break down once results are not being delivered. The anticipated savings, corporate gains, profits increase and returns should remain the primary focus while the integration is being carried out. This means generating visible fast results as early as possible and showing progress in the first three months. When favorable outcomes are not being delivered, stimulus and momentum are lost, the company loses confidence points and staff dedication falters as process fatigue sets in. Interruptions can determine a reduction of clientele and the deterioration of strategic business partnerships, which in turn severely impact the core business.

Due to the fact that a poor plan of action on target synergies can result in a negative reputation, solid governance and project management are essential in keeping the staff focused and on track.

Ignoring cultural and individual considerations – While efforts might be made in order to secure that the acquiring company’s culture is consistent enough to successfully finalize the transaction, cultural and individual issues will always need to be addressed. Given the fact that key talent is vital to the completion of any acquisition, winning over valuable personnel is essential. Discovering, motivating and incentivizing the right talent for success increases a deal’s value as it determines the retention of the experts that make the business work.

Even though it’s necessary to secure that the leaders of the bought out company share the same mindset, it is equally important to timely connect with the staff members that have contributed to the company’s success through their work and knowledge, ranging from service personnel to project managers and more. Losing valuable talent can be a result of insufficient financial compensation, not fitting into the combined mold of the entity from a cultural point of view or not being provided opportunities for advancement after the company was acquired.

The individuals that will be the most vocal regarding their doubts of post-integration success are the ones that should be engaged early and provided with insight into the future and what role they will play. Irresponsible mitigation of operation costs can lead to valuable key talent walking away which in turn translates into a reduction if the management’s credibility.

Lack of transparency – While a certain level of discretion is recommended during the discovery, reviewing and negotiation processes until the finalization of the deal, executing the integration is a completely different matter. Keeping the staff informed is the responsibility of the integration team, thus avoiding the spread of speculations at a corporate level due to personal presumptions.

The success of a deal is stimulated by employing a sequential, measurable and evolving merger and acquisition process. A well-defined and efficient process imbues the right determination to carry out a successful acquisition, from the initial stages up until integration.