Is Acquisition Right for your Business?

Peter Mardon Corporate Partner

Acquisition is an important route to grow your business. The best acquisitions combine economies of scale, synergy and increase in business value. Access to new customers for your existing products and access to new products for your existing customers can transform profitability.

 

Organic growth is always an option but acquisitions can give faster results.

 

The best starting point is to create a growth strategy plan with clear objectives. Is acquisition the best way of achieving these?

 

Then, before defining your ideal acquisition criteria let alone identifying or approaching targets, make sure your business is equipped to make a successful acquisition. Check that:

 

  • your business (management, systems, processes, HR and IT) is well structured to enable a successful merger
  • you have sufficient funding
  • your solicitors and other advisers have the necessary skill to structure the terms of the acquisition and drive the process to completion
  • your growth strategy is clear so that you do not get diverted from your original objectives and get tempted to the attractions of an acquisition even if it does not fit in with your overall strategy
  • most importantly you and your senior management team are personally prepared to invest the necessary time and effort

 

Next, define your perfect target. What are you looking for:

 

  • Location (relocating employees and/or equipment)
  • New client base
  • New skills from new employees
  • New product lines
  • Opportunities to cut costs?

 

The next step is to identify actual targets:

 

  • Consider appointing an agent to review the market for targets
  • Trade journals and websites
  • Remember that key suppliers and customers, as well as competitors or other businesses similar to yours, might be worthy targets
  • Think “outside the box”. Often the best targets are “hidden” so really think about the market, consult your salesforce and procurement team: they may have ideas

 

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