Acquisition Search; How To Waste Resources & Have A Bad Experience

solar eclipseOver half of all acquisitions don’t make it to the closing table & many companies spend years to find a deal that meets their criteria.

Six years ago, A CFO acquaintance spoke to me about his company’s acquisition search process.

He confided in me that his firm’s president had traveled extensively to research potential targets with very poor results.

Based on the CFO’s recommendation, the President met with me to discuss our process and tools.

He quickly told me that my approach was not superior to his and I could not possibly add to what he knew about his industry or his database for potential candidates.

He showed no appreciation for our criteria measurement tools, or the concept of large scale contact and database building & management that our company provides to clients just like his.

He preferred one-at-a-time trips to visit target companies over our process and sent me on my way.

A few years after our meeting, I checked in again with my CFO contact and asked the direct question, “has your company completed a transaction since we started this discussion (elapsed total time of six years)”? His answer was “no”.

What this company has spent investigating acquisition candidates, one at a time, nationally and internationally over the past six years is many times what they could have spent hiring a qualified president or working with a professional firm for profiling and researching target candidates.

Companies like this sometimes feel compelled to make transactions that don’t fit.  Fortunately, that did not happen;

That’s where data feeding the KPMG study that only 17% of acquisitions add value and over 50% of acquisitions destroy value comes from.

Know the acquisition history of the president you hire if you need to have acquisitions done. If you are working with someone with a small history, it is necessary make up for what’s missing.

Have something to add? Your own business wit?

Got a different point of view, want to play devil’s advocate, or just think we’re all wet? Post your experiences or examples.

Mike Tikkanen


One thought on “Acquisition Search; How To Waste Resources & Have A Bad Experience

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  1. I can’t help thinking about what the company might have done with the money they spent sending their president on his travels. From my perspective it seems they paid him a lot of money then sent him away so that he couldn’t do his job.

    What didn’t get his attention in the company while he was out wasting resources?

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