FFCON21 Breaking Barriers May 11-13, 2021

What You Should Know About 2020 Merger and Acquisition Increases

Guest Post | Dec 21, 2020

Mergers and Acquisitions during covid - What You Should Know About 2020 Merger and Acquisition Increases

In 2020, there were many mergers and acquisitions in the business world, far more than in the typical year. There’s not much doubt about why things worked out that way. It was because of Covid-19 and its various direct and indirect business impacts.

There were almost no niches that the pandemic did not affect, and one of the ways it did was to threaten small companies with bankruptcy. Some of them closed down permanently, with the owners giving up the ghost when they saw no other alternative. However, some smaller companies approached larger ones with the idea that the larger entity could fold them under its wing.

In this article, we’ll take a look at these mergers and acquisitions, as well as what all of this frantic restructuring means. We’ll also talk about what you should expect and steps you should take if your larger company is taking control of a smaller one.

What Does All of this Merger and Acquisition Activity Mean?

Marketplace stated that this past summer was the busiest ever in the acquisition and merger areas. In Q3 alone, there were more than $1 trillion in transactions around the world. So, what does this mean?

Two of the things it indicates are fairly obvious. It means that:

  • Many small companies are going to disappear, or they have already
  • Several large companies are growing even more massive and powerful

The strongest trees remain standing in a storm while the tempest’s fury sweeps the weaker ones away. This is unfortunate since the smaller companies that had to fold were the mom-and-pops that many individuals feel are a community’s bedrock.

See:  To Support Disruptive Technologies, Take Bigness Seriously

What remains are larger chain stores like Home Depot, McDonald’s, Pizza Hut, Target, Walmart, etc. These companies don’t tend to pay their workers very well, and they make the same cookie-cutter products.

Some communities fought to keep their local establishments open, but often over the last few months, it did not prove to be enough.

 

What Can You Expect if You’re Overseeing a Merger?

This is the way of the world, though, and while few people could have predicted the pandemic, we must all play the hand the fates deal us. That includes both smaller businesses and the larger ones that are weathering this disastrous year.

If you own a company that’s merging with another one, or you’re overseeing an acquisition, there are many things you’ll need to do and several aspects of the whole business that you should expect. For instance, you will probably need to:

  • Get rid of redundant employees or departments
  • Integrate two different business cultures

Maybe if you’re taking over a smaller company, you’ve agreed to let them continue to manage their affairs. You’ve lent them capital, with the understanding that they will leave their managerial and employee structure in place. They will simply cut you in on their profits.

If you’re essentially absorbing them, you might not need their website since their brand name will disappear. You can get rid of their site and possibly let their IT department employees go unless you have places for them on your team.

You will need to integrate the accounts receivable and payable departments, which might involve laying off some employees again. You’re also going to have to look into process automation since that will doubtless save you some money, and you want to reduce overhead during this initial merge.

If you can set up accounts payable automation, that’s a great thing to have. It can save money and confusion. You might be able to get rid of some employees and cut salary, which you can then allocate elsewhere, like toward your new marketing budget.

 

How You Might Handle the Whole Process Systematically

If you’re confused about how you might go about this somewhat complicated process, here are some suggestions. You can start by listing all of your new employees and assets. You can then look at all the new positions that you need to fill, along with your new anticipated operating budget.

You can then try to figure out who you need and who is extraneous. You might decide to give severance packages to those you cannot keep if you can afford to do so.

See:  Canadian small businesses are facing extinction amid lockdowns

You should then figure out the new financial operating structure. You might need to create new job titles if that is appropriate.

As you start to get a better idea of how the new company’s structure will work, you can figure out the command chain. You should know who’s at the top, who reports to them, and on down the line. You’re looking to implement stability as soon as possible so that the whole endeavor can start up with as little delay as possible.

 

Goals and Financial Matters

Next, you’ll need to set your next milestone series. In other words, you should look at what you want to accomplish in next year’s Q1, Q2, etc. You should be able to identify both short and long-term goals.

You might look at whether it makes sense to bring in new investors. If you’re bigger than ever now, you can compete for a larger market share, and if you have angel investors who want to get into your industry or niche, now would be the time to approach them.

All the employees will need to adjust, both from the company you’re bringing in and your existing one. Some of the new company’s employees might not be happy with the way things went if they wanted to remain independent.

Quashing any mutinous rumblings will be part of your job as well. You will more than likely want to keep some of the new acquisition’s employees, but only the ones who won’t be bad for company morale.

Remember that there is nothing wrong with your business entity being opportunistic and buying out the competition. You didn’t cause the pandemic, and if you hadn’t stepped in to acquire the company in question, they might have gone out of business instead.

 


NCFA Jan 2018 resize - What You Should Know About 2020 Merger and Acquisition Increases The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - What You Should Know About 2020 Merger and Acquisition IncreasesFF Logo 400 v3 - What You Should Know About 2020 Merger and Acquisition Increasescommunity social impact - What You Should Know About 2020 Merger and Acquisition Increases

GET DRAFTED AT #FFCON IN 2021!


Some past Fintech Draft pitchers - What You Should Know About 2020 Merger and Acquisition Increases

FFCON21 image Your Voice Counts 3 - What You Should Know About 2020 Merger and Acquisition Increases

Sign-up for NCFAs weekly newsletter and never miss a beat:


NCFA Newsletter subscribe600 - What You Should Know About 2020 Merger and Acquisition Increases

Support NCFA by Following us on Twitter!