Two Ways Of Managing Acquisition

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Better Prospecting = Better Deals or,

Nightmare on your street:

Aggressive second generation owners determined to grow by acquisition.  A five member internal team that includes two mid thirties family members is chosen to tackle the project.

 The search begins by calling brokers to bring deals which they sort through with a set of criteria that they have determined to be right for the business.  Quickly they have data to sift through on forty or fifty candidates and poor tools for comparison or valuation based on their corporate criteria. 

 The data becomes overwhelming and not much help in decision making.  Much time is spent traveling and investigating.  Team members don’t agree and have no way to accurately compare candidates or make a decision on what should be done.

 If a decision to move ahead is made under these circumstances, the 80/20 rule may well apply: 80% of acquisitions don’t add value.  Over 50% of acquisitions destroy value.

 If the transaction is finalized, it is still critical that audits (financial and non financial) due diligence and integration be handled professionally.  With a corporate team missing significant parts of the acquisition puzzle, it is not hard to understand how companies fail at acquisition.

 A Better Way: 

Aggressive second generation owners determined to grow by acquisition using best practices. 

 They begin by building a smart team that includes the talents they know they will need.  It may include outside advisors.  

Next they determine precisely what fits (challenging assumptions) and create a weighted averages criteria model that measures candidates and allows comparison in ranked order.  Then they, 

* Create a plan for building and contacting a large number of specifically chosen candidates with a well crafted contact letter,

 * Build a system for compiling and managing large quantities of information from the many companies that will be reviewed over the coming months,

 * Plan for audits (financial and non financial), due diligence, integration, transition, and monitoring of all aspects of the transaction.

 Having the tools, systems, and protocols in place to discover and research the best candidates, manage the information, put the right people and procedures in place in a timely fashion (acquisitions are time sensitive) makes all the difference in the world.     

 

 

 

Have something to add? 
Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.                                                                                                                                                                                   Brought to you by;                                         www.packardacquisitions.com
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