Defining Acquisition Risk, by Mike Tikkanen

According to Interim CEO, 71% of their placed executives have completed less than three acquisitions when they are hired for that purpose. This partially explains why between 53% & 61% of transactions destroy value & only 17% create substantial returns From Planning to execution to integration, acquisitions are complex.

The finely tuned watch comparison is an appropriate analogy. Any misaligned piece causes the watch to run badly, and while there are many people capable of dismantling the watch, few can put it together.

Repeatedly, I see teams of smart people with pieces of the skill set required to understake the acquisition process, only to observe disastrous consequences of an obvious mistake blowing a hole in the transaction (or worse yet, forcing a poorly chosen transaction to be completed).

Much of the candidate criteria determination, auditing, and integration is non linear. It’s surprising to see how much attention is paid to numbers, and how little to people, systems, relationships, and networks.

Mapping an acquisition is too much for this blog, but to state the wisdom of including a plan for non financial audit and integration at the time of profiling and research would guarantee an understanding of process and a good chance that missing gaping misfits in people and systems would less likely ruin your deal.

Risk Considerations:

The True Tale of a Deal

Many of us read INC Magazine. I hope you’ve been following the tale of Norm Brodsky’s effort to sell his company. His chronology began in 2006 and continues today.

He recounts his path into and around some of the potholes on the journey to a successful transaction, including:

-the decision to sell
-balancing the needs of each partner
-the offer
-choosing a buyer
-due diligence
-negotiations
-external factors
-wild cards
-selling a majority of your company
-trying to sell it again

The saga goes on, as Norm works all the angles while he attempts to exit the business successfully.

You can catch up on the story at: http://tinyurl.com/yeshdur

Get the right experts involved in your deal…don’t try to learn as you go, no matter how smart you are.

Cliff Allen 651-226-2853

Not Invented Here

Sensible people can make thousands of hours of work & spend huge dollars to accomplish what has already been done because of the mantra “the work must be done in house”.

Whether seeking market share, technology, distribution, or other growth options, the not invented here syndrome can be a defensive and high risk position.