Finding Better Acquisition Targets (how & where)

30 years of research & hard work finding target candidates for companies, has taught me where bad candidates come from and how easy they are to find.

It is more common to find acquisition teams weaving a silk purse out of a sow’s ear than to find them working on the front end to build a process and tools that create database of qualified target candidates to meet measurable criteria worked out through meaningful exercise.

Work done on the front end to systematize the acquisition process minimizes the chasing of dead ends & saves considerable  time & money.

In response to the majority of deals that never make it to closing (50%) and those that destroy value once they are completed (over 50%) a few smart companies have incorporated the innovations that makes systematic growth through low risk acquisitions predictable (Warren Buffet, Digital River, Lawson Software – the “old” Lawson Software).

The manufacturer I left last week was sure there was no budget for programs and process that would appreciably lower the risk of bad candidates and failed transactions.   They were however, full speed ahead spending millions of dollars on acquisitions.

A recent PA client just finished digging out from the financial disaster that was the result of a bad acquisition completed ten years ago.

Like the cat burned when it jumped up on a hot stove; it will never again sit on a hot stove (nor will it ever again sit on a cold stove).

If you have a story to share about a company you know that chose the innovative path over the common we would love to hear about it. If you know a story about an acquisition that failed or destroyed value, remember it’s not nice to point.

Is your company common or innovative?

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Plan B

Twenty years ago I worked with an inventor that had built a high tech piece of equipment in his garage that NASA would be proud to have its name on.

At the time I suggested strategic partnering with industry as his technology was game changing and it would be difficult to bring to market without huge investment and very good management (that the company did not have).   I asked him to consider my approach as a risk reducing plan B if his plan A wasn’t working.

Like other inventors I have known, he refused to consider the joint venture approach and stuck to his own money raising business plan.

Thirteen years ago I revisited this fellow and was told by him that they were on the cusp of a great new investment that would end all their problems.

Just a few months ago, I called on this company again (new name, same company), my old friend has been tossed out by investors and his reputation within the company is unfortunate (he was brilliant and hardworking).

Still under a million dollars in annual sales, a product no longer miles ahead of the competition, & investors that are worn out and edgy.

Med tech, nanotech, low tech, inventors often believe that the only path to success is more money.  Being open to a two track approach (plan B) gives them choices they don’t have when the finance valve closes.

Losing the edge of superior technology and running out of money make success unlikely.