The success of a transaction is contingent on a variety of factors. One of the most important is whether the target company’s financial performance and projections are sufficient to sustain the deal over the long term. A strong balance sheet and consistent growth in revenue are excellent indicators. Other indicators include cultural compatibility, the capacity to scale operations, and the presence of intellectual property like trademarks and patents.

A successful deal depends on a careful plan and execution. A thorough due diligence process can assist in identifying possible roadblocks and pitfalls, which can be addressed key digital room features for legal firms in advance of the transaction. This is particularly crucial in deals that involve a substantial capital investment in cash or stocks.

An effective method of deal sourcing is to build and maintaining a large network of professionals from the industry and investors. These relationships can provide you with early access to a variety of off-market opportunities. A real estate developer, for example may establish relationships with investors and brokers for early access to commercial property before it hits the market.

Acquirers evaluate the success of an acquisition by the goals they set for themselves such as increase in revenue or synergy gains. These goals are often reached or even exceeding them, which can lead buyers to believe that they’ve made a difference. This can come at the expense of the existing business, which might not be performing as would be expected.