Are there procedures in place to monitor the effectiveness of current acquisition strategy?
What would be discovered if a cost benefit analysis were executed?
Two top executives have interviewed me recently; both held that their corporate acquisition strategies were superior; both have spent into seven figures without any positive results.
The first gentleman spent almost one year at time looking at a single company (over a seven year period investigating seven companies) in other parts of the world. I expect that he liked to travel. The second fellow had investigated hundreds of companies over a four year period (he liked to work hard).
Neither approach ended in a transaction.
In the first instance, the defining criteria were extremely restrictive & the pool of candidates (one at a time) was just too small.
In the second case, the strategy of calling twenty brokers and requesting a thinly defined criteria guaranteed that the myriad of candidates would be poorly selected and a great deal of work just to find one that might fit.
A simple criteria exercise & contact discovery process would have brought many well-qualified candidates into the endeavor and not taken four or seven years to execute a worthy transaction.
Why is this so rare?
(50% of acquisitions don’t make it to the closing table & more than half of all completed transactions destroy value)