Making an acquisition means taking a lot of different risks, different in their nature and magnitude. But after all taking risks is what entrepreneurs do all the time, when they launch a new product, when they enter a new market. The difference with the M&A risk is that it’s a new and unknown one. Being an entrepreneur is about taking risks but controlled risks. This means understanding where the danger may be coming from, measuring the threats and have ways and means to reduce their potential impacts.

FAIR-M&A has designed a unique tool to help entrepreneurs, funds and their advisers to evaluate the risk taken in an acquisition. It starts by defining 7 main domains of risk ranging from the poor strategic thinking preceding an acquisition to the underestimation of the integration difficulties. FAIR-M&A Acquisition Success Evaluation describes and measures each area of risks and converts these analysis in an estimate of the probability of success of an acquisition.

To maximize your chances of success in an acquisition, you should have a FMA-ASE rating way above 50%. A figure of 60% to 65% will definitely put you on the safe side. If on the contrary, FMA-ASE shows a very low level, like 35% to 40%, the decision to move forward in the acquisition should seriously be reconsidered. Remember that risks never add, they multiply.