- The rationale (strategic goals) for the transaction is compelling and well articulated.
- The target is much smaller in size than the acquiring company.
- The target has a similar culture to the acquiring company (the target is a "good fit" with the acquiror).
- The target's systems are similar to the acquiring company or can be easily ported over to or integrated with the acquiror's systems.
- The due diligence has been comprehensive and any any issues (and there are always issues) have been resolved before the closing.
- The integration process is transparent and well-managed. The integration team should be involved very early on in the due diligence process and continue through the post-closing integration process. Communication is key.
- The retained employees of the target should be appropriately incentivized and aligned with the success of the merger.
Subsequent to that post, an article "Why so many mergers and acquisitions fail after the deal is closed" looks at why many middle-market M&A deals fail in the integration process. The article lists four primary reasons why the post-closing integration period is so prone to failure, including that the importance of the integration process is under-appreciated, integration is complex and takes time, and the integration leader is often installed too late in the process. It's a good article that builds on my thoughts above.
Here's the link: