Evaluating Mergers and Acquisitions: Top Questions to Ask Yourself

Evaluating Mergers and Acquisitions: Top Questions to Ask Yourself

This article was updated on September 18, 2018.

A merger or acquisition represents a pivotal moment in the lifespan of a small business. Whether you're being acquired, joining forces with another business or purchasing another business, there will always be questions lingering in the back of your mind. The biggest, of course, will be "Is it worth it?"

There is no straightforward answer to such a question, and for many founders, the process of evaluating mergers and acquisitions is further complicated by sentimentality. After all, you've built your business from the ground up and are now considering a transaction that could lead to a major change in direction. How do you move forward?

Ask yourself the following questions when evaluating the pros and cons of a merger or acquisition:

1. Will It Empower My Business to Grow?

If you started your business with an overarching mission and vision, this question is vital. A merger or acquisition should give your business a platform to expand and achieve more. For instance, an acquirer may be able to help you reach a larger customer base, or an organization you purchase may help you expand your product line. Focus on the big-picture outcome of your proposed merger or acquisition to help ensure you're taking the right steps forward. This should always be at the forefront of your mind when evaluating a decision with such far-reaching implications.

2. Will It Support My Stakeholders?

From venture capitalists to advisers, customers and employees, small-business owners work with a variety of stakeholders. The sale of your business, a merger or an acquisition will affect all these people and partner organizations over the long term. Before going through a transition, you need to understand the wide-ranging impact on your key relationships. Are you ready to answer whatever questions they will have? Are you certain of your ability to support them through the transition?

3. Will I Feel Personally Fulfilled?

As your company's founder, you know your business best. Will you feel good about the change that is about to take place? Do you feel this next step is really in the best interest of your business? These questions can be difficult to definitively answer, but it is vital to carefully consider them as part of the decision-making process. Chances are, you already know whether a deal is good, but you still need to decide whether it's in the best interest of your organization's future. So, when evaluating mergers and acquisitions, you need to be sure the path forward aligns with your vision for what you've built.

The Biggest Question

One of the most important considerations is the financial impact of the proposed transaction. Every merger, acquisition or business sale will yield financial consequences, both personally and in terms of your organization. By opening this door, however, you are also closing an important chapter. At its most base level, evaluating mergers and acquisitions boils down to the balance between your monetary interests and your overarching personal objectives.