M&A: What You Need to Know Before Getting Started

Mergers and Acquisitions (M&A) are strategic tools for growth, diversification, or sometimes even business survival. But contrary to popular belief, a successful transaction does not begin with price negotiations — it begins much earlier, with solid planning and a clear understanding of the challenges involved.

Among the many factors to consider before moving forward with the purchase or sale of a target company, here are four fundamental points:

1. Strategic Purpose: Why Does This Transaction Make Sense?
Every M&A transaction should be driven by a clear objective — whether it’s growth, entry into new markets, operational efficiency, innovation, or even a strategic exit. Companies that enter an acquisition process without a well-defined purpose risk wasting time and resources without generating real value. Before initiating any negotiations, it’s essential to assess whether the transaction aligns with the company’s long-term strategy.

2. Financial Valuation: Does the Price Reflect True Value?
Valuation is a central component of any transaction, but it should not be the sole factor in the decision-making process. Many deals fail because, although they appear promising on paper, they overlook risks such as low customer retention or overreliance on the founders. Additionally, the deal structure — whether cash, earn-out, or equity swap — can significantly affect the viability of the transaction. Ideally, the price should reflect not only the assets and revenue of the target company but also the challenges and opportunities that come with the business.

3. Due Diligence: Invisible Risk Is Still Real Risk
Due diligence is far from a formality — it can be the decisive factor between a successful deal and a major liability. Legal, financial, and operational aspects can conceal substantial risks. A superficial review may lead to post-closing issues that destroy value instead of creating it. Identifying potential liabilities in advance allows for better expectation management and, if necessary, renegotiation of the deal terms.

4. Organizational Culture: A Commonly Underestimated Factor
One of the greatest M&A challenges doesn’t lie in the numbers — it lies in the people. Differences in corporate culture, management style, and internal processes can lead to conflicts that directly impact post-acquisition performance. Companies that succeed in M&A not only conduct thorough due diligence but also carefully plan the integration of teams, ensuring a smooth transition and minimizing cultural friction.

Entering an M&A process without proper preparation can be a costly mistake. A successful acquisition is not defined solely by the contract, but also by strategic alignment, thorough evaluation, and careful execution.