M&A in Remote Locations

M&A can allow businesses to expand their geographical reach and gain an edge over their competitors, and gain access to new technologies, employees, or assets. However, M&A is also a long-lasting and costly process. Due diligence can take several months to evaluate potential target companies. This involves the analysis of all operational, financial, and commercial data. This process is more difficult when a company is remote, since many of the same steps are needed for success, but there are additional problems with communication and collaboration.

Preparing for Day 1

If a company is acquired, the first day of operations (known in M&A terminology as “Day 1”) should be planned. This includes establishing organizational structures, integrating back-office infrastructure and IT systems, as well as explaining to employees what will happen in the future. The M&A team also has to ensure that all crucial documents are accessible, including legal contracts, agreements, and financial models.

A shared vision

Understanding the similarities and differences in the culture and business goals between the parties is crucial to the success of an M&A strategy. This is especially important when companies acquire and merging in a remote manner. Without a clear vision the new entity could lose its direction and cause friction within the workplace.

M&A is a high-risk process which often results in unintended consequences. The sunk-cost fable, particularly can cause M&A decision makers into agreements that are based on the assumption that they will agree to an agreement that is worse than the best option.