Acquisitions: How to prepare the basis for decisions

Decision basis for management, board of directors and owners in case of acquisitions

In connection with an business acquisitions it is crucial that management, board and owners have access to an informed decision-making basis. By carefully preparing and presenting an in-depth business case, a detailed integration plan, an informed recommendation and decision basis, the opportunities for the parties involved to make informed decisions are increased. This ensures that all aspects of the deal have been analysed and that there is a clear plan for how the acquisition will be successfully executed and integrated.

What can be included in a decision basis?

A decision base contains several important sub-areas, all of which contribute to a thorough analysis of the acquisition and its consequences. Below are examples of some key areas:

Summary of key findings from due diligence

The first step in the decision basis is to summarize the key findings from the due diligence process, including the commercial, financial, legal and operational risks and opportunities of the target company. This summary helps the board and owners understand the strengths and weaknesses of the target company, and provides a clear picture of the risks and opportunities identified.

Identification of possible risks and opportunities of the target company

A careful review of the risks and opportunities that emerged during the due diligence process is critical to assessing the potential of the acquisition. This can include everything from financial risks and regulatory challenges to operational opportunities and market potential. By clearly identifying and analyzing these factors, decisions can be made with a full understanding of the consequences that may arise.

Enhanced Rational for Acquisition

A detailed rationale for the acquisition describes why the acquisition is strategically important for the company and how it fits into the overall business strategy. Examples of acquisition rationales include market and geographic expansion, access to new technologies, new product and service offerings, or improved competitive position.

In-depth analysis of the market and market potential

A detailed market analysis is important to understand the risks and opportunities that exist in the current market. This includes, among other things, an assessment of the addressable market, growth potential, competitive landscape and trends affecting the industry. This analysis helps to gain an understanding of the market and its drivers as well as how this may affect the target company in the future.

Financial analysis together with budget and forecasts

The financial analysis includes a thorough review of the target company's financial position and how the acquisition affects the acquiring company's balance sheet and cash flow. This includes, among other things, the purchase price, the financing structure and any financial risks that may arise. Furthermore, budget and forecasts should be included along with scenario analysis containing different scenarios for the future.

Synergies and cost savings and how to achieve them

Identification of possible synergies and cost savings is an important part of the decision-making basis. It also describes how these synergies are to be realised and what impact they are expected to have on the profitability of the merged group.

Detailed integration plan

A detailed integration plan is central to ensuring that the acquisition creates value and that the target company is integrated efficiently and effectively into the existing business. This plan should cover everything from organizational change and IT integration to management of corporate culture and personnel. A well-thought-out integration plan reduces the risk of disruption to operations and helps to quickly realise the expected synergies.

Risk analysis related to the acquisition

The risk analysis in the decision base provides an overview of the main risks associated with the acquisition and how these risks are to be managed. This can include everything from market and operational risks to financial and legal risks. Identifying and planning how these risks can be managed reduces the risk of negative consequences while increasing the chances of a successful acquisition.

Recommendation to the Board of Directors

Finally, the decision base contains a clear recommendation to the management, board of directors and owners. Here the main arguments for and against the acquisition are summarized, and a final recommendation is given based on the analysis carried out. This provides a clear and clear basis for making an informed decision.

An adapted and clear decision basis is essential to ensure that management, the board of directors and owners can make an informed decision on the acquisition. By including all relevant aspects, from due diligence and market analysis to financial review and integration plan, it ensures that all important factors have been taken into account and that there is a clear plan for how the acquisition will be executed and integrated in the best possible way, increasing the chances of a successful acquisition.

At FLB Partners, we offer expertise and support throughout the acquisition process, from strategic planning to integration. Contact us today to discuss how we can help your company with the acquisition process.