Mergers and acquisitions continue to be popular with business. Yet many high-profile failures illustrate the dangers of an unplanned approach to risk, where managers are prevented from anticipating problems and achieving their original business objectives.

A coherent and co-ordinated methodology for dealing with risk, at any point in the 'deal cycle', is an essential ingredient for success.

Through this, managers can better understand the value of the assets they are buying in the pre-deal phase, have greater success structuring and valuing the deal, and be in a better position to integrate corporate processes and cultures after the deal is completed.

Critical questions you need to consider

• Have you identified a company that you would like to acquire but are facing stiff competition from either trade or financial buyers? How can you win and secure the deal?

• Are you certain that you are paying the 'right price' for the asset?

• Are there any particular liabilities, such as pending litigation or environmental risk, which are proving to be 'deal-breakers'?

• How are the past liabilities of the directors being indemnified? Is the cost being borne by the vendor or purchaser?

• Do your insurance policies cover the risks facing the new entity?

• Have you identified the employee benefits issues of the merged company?