Non-financial factors to be considered in an Acquisition

The non-financial characteristics that should be included in the evaluation might include the following:

    Corporate Culture     Location
    Regulatory and Anticompetitive Factors     Personnel
    Management     Technology
    Corporate Governance     Customer Base
    Markets     Customer Quality
    Image and Marketing     Product Range
    Organisational Fit     Integration Risks


Corporate culture - how does the corporate culture of the target compare with your own? How will this affect the integration?

Regulatory and anticompetitive factors - how easy will it be to gain acceptance of the merger? Will there be regulatory problems because of the size of the market or competitive positioning?

Management - what are the strengths and weaknesses of the existing management team? What is their management style? What impact will this have on the integration?

Corporate governance - how does the corporate governance of the target compare with your own? How will this affect the integration?

Markets - what are the possible synergies between the markets of both yourselves and the target? How can they be achieved?

Image and marketing - how do the images of the two corporations compare? Can this be exploited in marketing? What will be the costs, risks and benefits of the integration?

Organisational fit - how does the organisational structure of the target compare with your own? Will it be easy to integrate functions?

Location - how do the locations of the target relate to your locations? What benefits can be obtained through combining some of the locations? What are the costs and risks of doing this? Are some locations likely to be surplus to requirements? Can these be disposed of? What are the implications of doing this?

Personnel - how do the skills and experience of the personnel of the target relate to those of your own personnel? What benefits can be obtained through combining some of the teams? What are the costs and risks of doing this? How many personnel are likely to have their contracts terminated as a result of the transaction? How can this be achieved? What are the implications of doing this?

Technology - how do the technologies of the target compare with your own? Can your own systems handle the projected increase in products, customers and transactions? Will systems integration be necessary? What are the costs and risks associated with this?

Customer base - how does the customer base and mix compare with your own? Are there overlaps in the customer base which could provide risk management issues? What potential is there for cross-selling? What percentage of customers are likely to be lost as a result of the transaction?

Customer quality - what quality of customers does the target have, in terms of longevity, risk profile, share of wallet, propensity to buy, loyalty, etc.? How does it compare with your own? What will be the impact of the transaction on customer profitability?

Product range - what is the product range of the target? How does it compare with your own? Are there any products in their range which will be of strong benefit to you? How will the product ranges be integrated? What are the costs and risks associated with this?

Integration risks - what are the risks of the integration not being achieved in the planned time scales and costs? What can be done to minimise these risks?

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