A deep dive into the threat & risk-free acquisition that your business deserves!

The business world revolves around the concept of Mergers and Acquisitions (M&A), where every brand is consistently contemplating purchasing another or combining to form a new entity. To revere this motivational notion, there lies a fleet of M&As that has been one of the largest of all time. With Verizon & Vodafone, Google & Android, AT&T & Time Warner, and Disney & Marvel, the exhaustive list impresses the business giants and draws some basics for the business transaction deals.

An acquisition is a highly successful step for the business, and why not! A business works incessantly hard to reach the position of the envisioned idea and feels ready to embark on a diversified landscape.

However, it is a known fact that not every acquisition sees the dawn of the day!

A Harvard Business report suggests that almost 60-90% of acquisitions fail. Imagine investing billions of dollars in an acquisition that turns out to be a failure. This staggering figure is proof why M&As are more challenging than they seem to be.

But what is it that collapses even the most high-profile acquisitions?

Amongst the many factors influencing an M&A failure, inadequate risk management, failed integration, exogenous risks, and inability to identify treacherous zones are a few that hold huge weightage. These elements only make it pertinent for businesses to consider assessing the risks involved with the acquisition before giving it a greenlight.

Let us walk you through the seamless and highly effective way of risk management, to make your acquisition risk-free.

Threat Risk Assessment: The M&A Prerequisite

The threat risk identification and assessment process are crucial to effectively managing potential security threats, financial risks, and challenges before an acquisition. What makes them vital is their capability of bringing down a business transaction to its knees is undermanaged and makes the most successful deal when planned strategically.

This encapsulates buyers/investors to be completely aware of the business’s existing condition and ethics which is a potential investment. Identifying these aspects creates a blanket of safety and protection and mitigates any risk that might cause the downfall of the acquisition both financially and ethically.

Understanding the sustainability of a company’s business
Often businesses undergo a series of planning, organizing, defining, conducting, compiling, and analyzing the approach and methods towards corporate due diligence before an acquisition. It incorporates thorough reviews and audits that offer valuable insights into the company’s financial and ethical condition as opposed to the information provided by them.

Corporate due diligence is the prime step to assessing the transactions from an informed standpoint. It can add significant value to the investor or buyer by pointing toward the vulnerabilities and offering insights into the aspects that the buyer was previously unaware of. Despite corporate due diligence as part of risk management, the majority’s failure is a cry for a broader understanding of its service offering domains. It will only accelerate the mitigation of challenges that stand in the success of a transaction.

To cater to the urgency of attention, risk management for acquisition is performed for the below business partners:
● Vendors where vendor due diligence incorporates the complete review of a vendor that may be a company/firm/ before a business transaction is entered. It enables the understanding of issues with the vendor company and increases the opportunities for better negotiations with market intelligence.
● Counter Parties
● Investors who look for strategic investment or wish to acquire inorganic growth
● Employees
● Opponents

This is where the risk management services make it seamless for a buyer or investor to ensure what they are buying and the extent of the seller’s liabilities, property risks, problematic contracts, and much more.

The journey of a long-term successful Acquisition starts with an Accurate Risk Assessment

It is no denying that poor risk management practices are simply an act against the nature of its definition. Moreover, it is only wise for any business heading for an acquisition to opt for corporate and vendor due to diligence services for its obvious benefits.

After all, why would a brand, delve into the financial, legal, operational, or tax risk with its years of hard work and reaching the pinnacle of its own vision, delve into the financial, legal, operational or tax risk. Enabling the strength of risk management to bring value addition, informed decision making, and minimal risks, this is how a buyer or investor can drive ahead with the benefits:

Begin your risk management journey early, with the right team to guide you throughout the vital stages.
● Ensure the due diligence team has hands-on experience in handling the financial and legal of a business.
● Understand your rights as a buyer and get into the details of the financial records and research of the company prior to the acquisition.
● Be certain that your services include target profiling based to identify the company’s ethical behavior, criminal background & court case history, and adverse media news.

With an amalgamation of market intelligence, financial, accounting experts, and data & research, a risk management professional offers a deep dive into the vulnerable domains of the seller prior to acquisition and prevents the loss of finances as well as reputation. Netrika offers a comprehensive fleet and training program to streamline this process and ease the training vertical, to guide professionals through their career journey. We collaborate with RIMS, the only accredited risk management certification globally, to deliver the certified risk management professional certification across industry verticals. 

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