Acquiring another company is one of the fastest ways to grow your corporation and gain an ever stronger foothold in the Philippine market. In fact, it isn’t uncommon to see large corporations here in the Philippines to acquire other companies and/or product lines. Notable examples over the last year include The Ayala Group acquiring half of Zalora and Century Tuna acquiring the rights to distribute Hunt’s products.
Although mergers and acquisitions may sound simple as you are “just buying” another company, the truth is that acquiring another business or corporation is a rigorous and detail-oriented process. As such, it is not particularly advisable to attempt to do this on your own. This is where working together with a trusted corporate lawyer becomes a significant advantage.
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Of course, there are many other steps you can take to ensure your own M&A goes smoothly. If you are considering acquiring another business to strengthen your corporation, here are few tips to keep in mind:
Assess Financial Capability Carefully
Acquiring another company is a significant financial commitment. Don’t forget you’re taking on a large number of employees, systems, products, and the like. Make sure your current finances are strong enough to handle the additional strain and responsibility. When assessing your corporation’s financial capability, pay close attention to how liquid your finances are over profit-and-loss statements. A corporate lawyer can help you with the assessment and recommend whether pushing forward with the M&A is feasible or not.
Keep an Open Line of Communication
Mergers and acquisitions are a relationship-intensive process. This is not limited to just the company you are about to buy. Communication with employees of both companies and external stakeholders needs to be clear and constant. Mergers and acquisitions tend to be quite unnerving for many people, and it is your responsibility to alleviate that unease. Consider providing updates at least once a month through company town hall announcements and open up a Q&A system so you can address the concerns of your employees.
Create a Designated M&A Team
It is not ideal for CEOs and other high ranking executives in your corporation to handle negotiations and the like. It is highly advisable to create a designated team to handle the merger and acquisition. Needless to say, you’ll want to create a team you can trust will have the best interests of your company in mind. When deciding who to add to the M&A team, make sure you get the input of your corporate lawyer and that the major divisions of your company (finance, sales, operations) all have a representative.
Review All Intellectual Property Documents
The seller will often need to prepare an extensive list of all IPs for your review. Unfortunately, assembling and reviewing all of these documents can be considerably time-consuming, which is why this part of the M&A process should be done as early as possible. Having an experienced corporate law team from a trusted Philippine law firm like Yap & Law Associates can help cut down on the time it takes to assemble and review the documents, as well as anticipate any possible issues.
Sources: 5 big corporate mergers and acquisitions in PH in past year, ABS-CBN News
5 tips for Executing a Successful Acquisition, INC
