When you want to grow your business, your options are building or buying. Often, the fastest and easiest path is buying, provided you have access to capital at a reasonable cost.
Many great businesses today became dominant players in their fields through acquisitions. Most acquisitions are driven by the desire to increase shareholder value. Bigger usually is better, or at least more valuable.
Before you set out on the acquisition trail, it is important to have a flexible but clear strategy for your acquisitions. You need to know what fits and what you are looking for in a target firm.
Buying Considerations
The challenge in making an acquisition work is managing each step of the process very carefully. You need to review a number of areas prior to seeking acquisition targets. Taking time to do this in advance can save you valuable time and resources down the road by serving as a template for your acquisition opportunities.
- Define your goals for acquiring
- Define your acquisition criteria
- Determine how the acquisition(s) will be funded
- Decide what you are looking for
- Identify how a target firm can help you create value
- Decide what you most want to see in a target opportunity
- Identify target firms
- Decide what you want to buy from the target firm: assets or stock
- Choose the deal structure that best suits your needs
- Select the members of your acquisition assessment team
- Decide who will negotiate your transactions
- Determine what you will need to review during your due diligence process
- Establish your timetable
- Decide how you will integrate the acquired business
The First Ninety Days Are Critical
Balance your need to think things through thoroughly with the urge to move quickly. It is often wiser to take advantage of partially effective solutions that can be implemented completely rather than wait for the perfect solution that may never come.
Integrating newly acquired firms doesn’t have to be like pulling teeth. Use caution, wisdom, sensitivity and a well-communicated plan. These are the key ingredients for making your integration – and your acquisition – a success.
Don’t rush the process. It will take less time if you do it right from the outset. It is up to you as the acquirer to make the integration work for everyone.