When a company acquires or merges with another company, it’s often also acquiring outstanding obligations, holdings, liabilities, employees and real estate assets. M&A due diligence should include a comprehensive evaluation of all real estate assets and liabilities. Having an experienced and knowledgeable real estate professional included early in the process of an M&A transaction will likely uncover untapped value or hidden liabilities and pitfalls. Beyond “market factors” your real estate expert should evaluate the synergy of the 2 portfolios. Internal infrastructure that is already in place should also be assessed to uncover the potential to support business expansion in other areas. From the perspective of the C-Suite, incorporating additional avenues for adding to the bottom line is a crucial step in the progress of an M&A transaction.
The opportunity for realizing hidden efficiencies and cost savings can be quite compelling. In a typical M&A transaction, real estate assets are not of principal concern, but, ironically, can prove to be a significant source of value and benefit for long-term growth and bottom line influence. Too often, a significant “near term” opportunity is missed because a real estate strategist isn’t part of the due diligence team. Developing a process for ensuring synergies between merging companies is an essential step for properly aligning real estate portfolios. While finding that synergy is a bit of an undertaking, detailed due diligence and a solid integration plan will make the process less cumbersome.
Consider the following when developing a strategy:
- What changes to the business will occur as a result of this merger/acquisition?
- What are the short comings of our current and the merged portfolios?
- Can the overlap be dealt with efficiently?
- Get input from finance, HR and other corporate leaders so you can use this opportunity to better support the business.
- Are any further trigger events on the horizon that should be considered in conjunction with this plan?
- Often, a quick audit of back billings, lease terms and other key data can uncover excellent leverage and cost reduction opportunities.