Navigating Small Business Acquisitions and Mergers

Small business acquisitions and mergers can be daunting adventures for your business whether you are selling or buying another. Certainly M&A can be a smart way to enter a new geography, access niche markets and of course, improve your competitive position.  Alternatively, if you are selling your company, they can be a great way to cap off a career, transition into a new investment opportunity, or capitalize on a great offer.  

The Army’s operations process for exercising mission command is a great visual and framework for how to successfully maneuver the acquisition or sale of your business. As the CEO, you are the Commander of your business. The focus ultimately comes down to planning, preparing, executing and assessing your progress along the way.

Army Operations Process can be used for Mergers & Acquisitions


As your business prepares to acquire or sell, it is imperative to be organized in your operations and your financials. Planning involves building a shared vision with your team and ultimately a strategic direction of the business. This includes improving the quality of your financials and the ability for them to quickly and efficiently survive a financial audit. It also includes having the operational infrastructure to be able to scale and/or position in a way that helps a sale go smoothly. Finally, understanding the following questions satisfactorily:

  • How sensitive is our revenue to economic cycles?
  • How diversified are our sales across customers? Products?
  • What’s the outlook for our industry? Margins? Growth?
  • Do we have stable staff and will they work positively through the small business acquisition and merger process?
  • What currency will I use (cash and/or stock) and under what structure?
  • Do I need acquisition financing? What will the bank require?


With a shared vision and the answers to the above questions, the next step is to prepare your business for the upcoming acquisition or sale. Having been through a number of acquisitions, I can attest to proper preparation allowing for a smooth transaction. So how do you prepare?

The first step is to take time to reflect on your answers and to coordinate your team to develop any areas where you need improvement. I personally recommend having an acquisition team identified to coordinate and lead the acquisition or sale process. From here, your team can work to improve the areas that have been identified. For instance, if your customer base is concentrated, it would be to your business’s benefit to broaden your customer list so that a loss of one of your top customers will not materially impact your business’s progress. Likewise, if you are positioning for an acquisition, it is important to prepare your management team for the increased staff, culture, and expanded operations.

In banking, as in most industries, preparation is everything. Customers respond very emotionally to a bank acquisition so it’s essential that we manage customer perception with regular, careful communication.  We also prepare task lists, technology reviews, charts of accounts mapping, customer accounts, order of events for the merger day, compliance/regulatory reviews; and ultimately, what controls we will have in place to review and correct any potential issues that may come along the way. Our goal is that on the Monday following the merger our customer will experience a smooth transition to our new interface, administer their finances as usual, and be confident that their money is safe and secure in our banking organization.

As you build your lists and organize the operational execution plan, you will also be reviewing how you intend to pay for the acquisition and/or the flow of money on the sale of the business. Proper communication with your accountants, bankers, and attorneys will help you prepare properly for the day of closing. On a bank financing front, you will want to prepare ahead of time and have the financial statements in order. Typically when looking at financing an acquisition for your company you will have to provide a checklist of detailed information. Most importantly:

  • Financial projections on the combined entities demonstrating sufficient cash flow to support the additional debt
  • Past three year’s financial statements on the existing entity
  • Detailed information of the collateral intended to support the acquisition loan
  • Organizational structure and leadership experience to manage the acquisition

The goal is to have an organized and transparent application so your business can receive the most attractive loan rates and terms for your acquisition. Proper preparation and organization can also help with the speed of loan approval rates so you can focus on the execution of your strategic plan.

“For the great doesn’t happen through impulse alone, and is a succession of little things that are brought together.”

Vincent Van Gogh


Proper planning and preparation leads to successful execution in mergers and acquisitions. Execution is the big event where your team comes together with all its efforts to ensure a smooth transition for the company, its employees, customers, and shareholders.  As CEO, you will play an integral part in leading the acquisition/merger team and monitoring the progress according to plan.

The hours spent ahead of the day of closing will payoff but the next deliverable in the acquisition of a company will be in the transition of its employees, customers, and technology. There are always items for which you have planned and prepared that don’t go as expected. We’ve learned that communication is key. Moreover, providing appropriate access and support for your customers and employees is essential. Face time and continued correspondence allow for the best opportunity and allow the recipient to be as informed as they would like and helps to mitigate any surprises along the way.

Most businesses are relationship-oriented. In our case, money is very personal and people like to know to whom they have entrusted their life savings and business banking needs. We purposefully schedule appointments with our new customers following an acquisition. This allows them the opportunity to meet the ownership, our directors, and our leadership. We’ve done this through individual appointments, open houses, meet-and-greets at our branches, and other events throughout the year.

Proper execution requires attention to the details. This is why I like this quote from Vincent Van Gogh. It is the succession of planning, preparation, and ultimate execution according to the plans that drives success. Many times execution goes awry because planning and preparation were not provided the necessary resources of time and energy.

Interested in learning more about business owners with real-life M&A experiences?

Flagship Bank sponsored Upsize Minnesota and Club Entrepreneur’s ‘Mergers & Acquisitions’ luncheon workshop on November 27, 2018. 

Andy Schornack, Flagship’s President/CEO & Director, participated as a panelist.  Andy has led or been involved in five successful small business acquisitions and merger transactions since 2012. Furthermore, Flagship Bank has also been an active financial partner for many businesses as they grow and/or sell their business.

Other Panelists included:

The full video of the event is embedded below.  Thanks to all those who attended and helped make this event a success. 



Army Operations Process Mission Command Image

Source: "The Operations Process." Digital image. ADP 5-0. July 2019.


If you're looking for support for your next business venture your local Flagship is here to help. Contact us today!


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