If you have ever completed a merger or an acquisition before, then you’ll understand what a complex task it can be from start to finish.
From finding and verifying potential targets to negotiating favourable terms and conducting rigorous due diligence, there are so many crucial aspects to master.
But what about the aftermath? What happens once the contracts have all been signed and the integration process has been completed? How do you measure the success of your latest acquisition a few months or even a year or two down the line?
With the risk of a deal failing to live up to its promise being all too real, it’s important to know how to measure your transaction’s success – or lack thereof – and that’s what we’re going to explain during this article. You’ll discover the vital metrics to evaluate your acquisition success, not to mention top tips on how to address any problems you encounter along the way.
Shall we begin?
When to begin measuring
First things first, you may be wondering how soon is too soon to begin monitoring the metrics of your acquisition’s success.
Although there is no one-size-fits-all answer to that question, the truth is that you can probably start measuring within two or three months of the deal being completed. This is particularly true if the business you’ve acquired is relatively small and offers products or services that match up with those provided by your company. After all, acquisitions that provide these kinds of synergies are more likely to result in a smoother and quicker integration.
Larger acquisitions, on the other hand, can take much longer to bear fruit, as there is a greater possibility of complications arising. Still, even then, you shouldn’t hesitate to start measuring the performance of your purchase within a few months, to see where efficiencies can be made and operations potentially tweaked.
The metrics to monitor
Once you do start measuring, it’s a good idea to monitor several different metrics to give you a holistic picture of how well the acquisition is faring post-sale. It doesn’t matter if you have a particular focus in mind, you should still keep tabs on various aspects of the acquisition’s performance to gain as clear a picture as possible of its success.
Here are some of the metrics to consider:
1. Revenue
Arguably the most obvious figure to monitor is the amount of revenue your new addition is managing to generate in the months and years following the purchase. To help you gauge its success more effectively, examine both the revenues of your portfolio as a whole and the new business.
You may also wish to measure the amount of revenue per client, as if your acquisition is allowing you to win bigger and more lucrative contracts then that’s a clear sign that things are going according to plan.
2. Complaints from clients
If you are receiving a higher number of customer complaints as opposed to higher revenue per customer, then this is an indication that some aspects of your new acquisition may need to be addressed.
While some clients may be sympathetic to the fact that M&A activity can result in some temporary upheaval, others may be less satisfied. Consequently, it’s important to take steps to address their concerns as quickly as possible.
3. Cost efficiencies
While many acquisitions are made with the primary goal of boosting turnover, others are conducted for the purpose of making critical cost efficiencies. Regardless of the reason for your acquisition, this is a vital area to focus on and monitor in the months following your transaction.
If your company is experiencing greater efficiency and lower operational costs post-integration, this is a clear indicator that the acquisition is already achieving at least some of its goals.
4. Client base/client acquisition rate
The number of clients you have, and the size of the business they bring you, is a metric with the power to make or break your business. If your new acquisition is bringing you a broader customer base and boosting your client acquisition rates, or if the revenue per client is significantly higher (as mentioned above) then this is another very positive sign.
If, on the other hand, you are experiencing attrition in your customer base then this is something that will need to be addressed promptly.
5. Employee productivity
It’s no secret that engaged and productive employees are the backbone of any company and represent a powerful driving force behind your success.
That being said, in the months following an acquisition, you might find that your newly acquired staff are struggling with the integration process. Levels of productivity may begin to decline while levels of workplace stress – and staff turnover – may start to rise. This is a common but potentially very problematic feature of M&A activity and it’s vital that your HR department takes steps to tackle these pressing problems as soon as may be.
For instance, if rates of stress and absenteeism are on the up, you may wish to offer one-on-one sessions with management to address staff concerns. You could also provide counselling and other forms of mental health support that mitigate the heightened levels of anxiety that surround mergers and acquisitions.
Finally, you might also wish to arrange some enjoyable company events and team building activities to help bring everyone together and make sure the whole workforce is on the same page and feels engaged and valued. When staff members feel that their fears are being heard and addressed, the likelihood of them calling in sick or even resigning is inevitably going to diminish.
How a business broker can help
The uncomfortable truth is that mergers and acquisitions often fail, for a variety of reasons.
To help your deal hopefully avoid this fate, it’s important to take steps – from the very beginning – to try and ensure its long-term success.
This is where a business broker’s input can prove invaluable, right from the start. As you approach any acquisition, having a tried-and-trusted business broker on hand to offer guidance and comprehensive support can maximise the chances of your deal turning out favourably.
The support they can provide will range from helping you locate and verify the most suitable candidates for acquisition, through to offering expert assistance with negotiations and due diligence.
Crucially, an experienced business broker can also offer you plenty of insider tips and advice on how to handle the integration of your new purchase as smoothly and effectively as possible, to minimise costly disruption.
Having this level of help and support on hand from the very start of the acquisition process will place you on a firmer footing and can help you to improve the chances of the deal going smoothly – both before and after the dotted lines have been signed.
To find out more, give us a call
If you are keen to embark on an acquisition in 2025 or beyond and you would like a reliable and professional broker to mediate the deal on your behalf, then why not get in touch? Here at Harris Acquire, we’ve brokered numerous successful deals for both buyers and sellers, and we can offer nuanced support and advice to make your transaction as effective as possible.
What’s more, you can sign up to our exclusive Acquisition Finder pilot, which includes a 30-day money-back guarantee for your peace of mind.
To learn more about this service, and how we can help you achieve your acquisition goals, give us a call on 01926 757100 or send a query to Hello@harrisacquire.com and we’ll be in touch right away.
