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Complex business transactions: Cash capital increases

M & A strategies are an important option for companies seeking to expand their product or service offerings, or gain access to new markets, in the scope of a sustainable growth and investment strategy. This particularly true if further growth cannot be significantly realised through organic growth. 

The economic objectives defined in the M & A strategy form the basis for deriving the appropriate integration approach for the acquired enterprise. The integration approach can consist of maintaining the acquired enterprise as a separate entity, or partial or full integration. The key success factor for the PMI process is the management that has to shape and control the process. This requires active and bilateral communication with the stakeholders on all levels in both companies at an early stage. The establishment of the new, mutual corporate culture, in particular given significantly different corporate structures (e.g. complexity, level of development, culture, language) requires special integration measures.

As the characteristics of the integration approaches show, the actions that need to be developed and implemented in the course of post-merger integration are diverse and highly interdependent. The focus of the post-merger phase lies in leveraging valuable synergies. The actions associated with this particularly include rapid implementation of the future organisational structure and target-oriented, structured adaptation of the value creation, management and support processes.

To ensure that the planned short-, medium- and long-term financial and earnings targets are achieved, amortisations actually occur, and the capital invested in the company acquisition generates the expected return; monitoring of the post-merger process is carried out in the form of effective controlling with key control indicators.

In practice, a large number of mergers are not successful because, for example, the (profit/innovation) potential of the acquired company was overvalued, the potential synergies (e.g. cost reduction, streamlining of the organisation) were overestimated or the acquisition target was not clearly defined quantitatively and qualitatively.

BDO supports companies in the development, management and implementation of the post-merger process, ensuring acceptance of the integration by all stakeholders, and that all factors of integration success are taken into account.