Industry Analysis Should Be Done Prior to Mergers and Acquisitions Taking Place, Lisa Ramotar Explains
Mergers and acquisitions happen as companies of all sizes look to expand. Some want to expand their size while others want to expand their offerings or their geographic span. Lisa Ramotar explains that industry analysis should be done prior to merging with another company or acquiring another company.
Lisa Ramotar has an MBA from the University of Toronto. Further, she has completed level 2 of the CFA exams and is a candidate in the level 3 examination. With her experience, she has analysed many companies throughout Toronto and beyond. Her goal is to ensure that industry analysis is sufficiently performed.
Prior to any merger or acquisition happening, Lisa Ramotar recommends researching the industry. This includes looking at the number of companies involved in the industry, what the current customer trends and how may they evolve, who are the suppliers to the industry and more. Lisa Ramotar explains that businesses should understand the product development taking place, the technology used, and the profitability of the industry.
Once the basic details of the industry are known, more research needs to be conducted. Lisa Ramotar suggests that businesses understand how a merger or acquisition will impact the industry. Will customers gain or lose from merger?
Further, Lisa Ramotar explores the importance of identifying challenges that may exist after the merger. If there is a merger or acquisition, the company initiating the deal will need to look at what will be its post merger operational considerations. In the area of customer engagement, a horizontal merger could allow for consolidation thus having the merged companies produce the same product. In this case there may be a need to manage the brands offered so that there is no product cannibalisation. In other cases there could be additional costs to allow for the customer to transition to a new business model. In other cases there may be a locational change or a target market change; in these cases research will need to be conducted to determine how the business can operate in a new location or appeal to a new audience.
Many businesses fail to conduct sufficient industry analysis, Lisa Ramotar warns. Without sufficient industry analysis resources used to acquire another company or part of a company may be wasted since the merger may not have considered issues with suppliers, staffing etc. Bringing in a professional who specializes in mergers and acquisitions allow for such analysis to be conducted at the outset and foster an easier transition for the company as it moves forward.
When strategic analysis is in place, it allows for acquisitions to be more profitable. A company can conduct “business as usual” as Lisa Ramotar explains. It will allow the company to simply have a better product offering because of what it has acquired. Further, if there is already a new department in place to help with a seamless transition, it can be more beneficial – and ensure that there aren’t too many learning curves.
Lisa Ramotar has reviewed many companies that have engaged in mergers and acquisitions. She has seen some that go well and others that have been nothing but problems. She believes that the key to success is in conducting an analysis of the industry from all angles. It ensures that there’s a better strategy in place to be able to move forward.