Learn Acquisition/JV Best Practices Webinar (& where to find the best non-brokered candidates)

blue-hillsIntroduce yourself to powerful acquisition/joint venture tools and process for discovering multiple, qualified, non-brokered candidates and avoid the biggest risks facing your next transaction.

Sign up for Packard’s free, short webinar and stop wasting time on opportunistic and broker driven deals.

Ten minutes plus your questions; Mike@PackardGroup.com

Why All The Bad News? (Why 80% of Acquisitions Don’t Add Value)

Acquirers often fail to take advantage of effective systems & people of purchased entities.

inferno2The most damaging and easy to avoid pain that companies inflict on themselves is the loss of perfectly fine and happy people through poor communication, or thoughtlessness.

True stories; Continue reading “Why All The Bad News? (Why 80% of Acquisitions Don’t Add Value)”

The Lion’s Way or The Right Way?

tigerAuthor Seth Godin has a book in his creative inventory called “Survival is not Enough”. In it, he writes about corporate DNA (he calls it mDNA) which includes everything that makes a company what it is….products, brands, people, IP, et al.

In it, he writes about acquisitions of other companies and that one of the primary reasons for an acquisition is to add new DNA to the acquirer’s corporate DNA to make it stronger. Continue reading “The Lion’s Way or The Right Way?”

ACQUISITION / JOINT VENTURE BRIEFINGS

SunsetFinding more & better target candidates

& reducing transaction risk


Database Building & Contact •  Measurable Criteria  •  Risk Management  • Integration
 

Individually Tailored to your company strategy and acquisition team

Two half day briefings

Summer and Fall dates available

 

For more information contact: 

Mike@PackardAcquisitions.com 952-542-9318

CAllen@PackardAcquisitions.com 651-226-2853

www.packardacquisitions.com

 

Better Tools for Finding Better Prospects
Better Prospects = Better Transactions
*

Are You Squandering Invisible Assets?

damon
LinkedIn and Facebook are electronic rolodex’s (did I just ‘date’ myself?) that can visually show how ‘connected’ people are – but what happens to people’s connections in the wake of the acquisition?

Ideally, as part of the pre-acquisition research, you would develop a feel for connections – industry, associations, advertising, buying – so you don’t jettison valuable connections unnecessarily or accidentally.

But in the trenches of integration, the acquirer’s team tends to (all too easily) assume that what they do and how they do it is superior to the acquired. This is a dangerous assumption.

Are there executive members of the acquired’s team in key trade association positions?
What media-buy contracts have the acquired’s team negotiated?
What industry connections to key suppliers are in jeopardy if you consolidate buying?
What history, loyalty, and goodwill to people take with them when they are let go?

I think everyone in business has heard, “Our people are our greatest asset” about a gazillion times. But in the heat of an acquisition, are people (and their connections) weighted with the appropriate value?

Contributed by Damon Kocina
Strategic Graphics, Inc.
Improve your impression
www.StrategicGraphics.com
www.LinkedIn.com/in/DamonKocina

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.

Death By Acquisition

bestpic-2-of-bridge-collapseDeath by Acquisition

 

Not knowing where the rocks are drowns many acquisition teams.  

Executing any step poorly increases the risk of failure.  

1.   Knowing what to look for and how to investigate target candidates is a process that needs to be made measurable.

A robust assumption challanging corporate exercise to determine the most important and least important attributes is critical piece of any acquisition.   This process should  include definable/measurable risk management questions, and core corporate strategies.

2.   A system for affordable mass contact and information gathering and data management insures a more useful information system and a higher number of qualified candidates with a higher measure of success.  Not knowing how to do this dooms us to the stone age practice of calling brokers and combing the yellow pages.

A recent client had investigated over one hundred poorly identified companies over four years with one small success.  Another company investigated fewer candidates, but they spent years pursuing companies located all over the world, with attendant costs, and no success.  Executive pay, travel, due diligence have been in the millions of dollars.

Fortunately neither company succumbed to the pressure of making a bad purchase (a very common problem), for that would have cost them many times more.

3.    Being smart in valuation in these difficult times demands having a finger on the pulse and the ability to make and defend the right offer.  This is no easy task without being tied in to professional organisation that monitors this information.  We are prone to hip shoot this process.  

Included in valuation is the snapshot integration financial and nonfinancial assumptions that must be predicted based on limited information that will be useful only if the process for information gathering is disciplined.  Without an accurate view of the combined entities, all valuations are at risk.

My experience points to extreme optimism about upside valuation and integration.

4.   Negotiation/deal structure/finance is of course the core of a deal.  Personalities, deal structure, math, and assumptions are either all right, or they are all wrong.  Any doubt in this area and now is the time to stop.  If the first three steps were executed wisely and well, this step is much easier.

5.  Acquisition integration chaos is more accurate terminology in many companies.  From CRM, HR, to the operations, integration professonals can save relationships, efficiencies, and businesses.  So often corporate branding, technology, and culture are shocked and damaged through an unprofessional, or inadequate approach brought in with the acquiring firm.  Valuations are negatively affected and it takes years to right the wrongs that occurred in a poorly executed integration.  

Only rarely have I seen mid market companies execute this step with any finesse or professionalism.  http://www.tx2systems.com/  can be helpful.

There are many distinct pieces to acquisition.  Companies that understand the process do well consistently.   Companies that fail to grasp the comlexities and learn the disciplines, seldom attempt a second acquisition.

Mike Tikkanen

www.packardacquisitions.com

 

 

 

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.
 

Dissecting Deals of Necessity

roughwaterDissecting Deals of Necessity

If necessity is the mother invention, it might also be considered
the mother of M&A in today’s wallowing market. Whether it’s a distressed acquisition out of a bankruptcy auction or a cost-cutting merger that eliminates capacity in a given sector, deals of necessity seem to be the only game in town.
 
The question I have, though, is whether or not these deals will work. The whole idea that two companies have to merge to survive evokes the old cliché about tying two rocks together to make them float. If a merger fails to address the fundamental issues facing two companies, then it’s unlikely a deal will save the combined business. The merger between XM and Sirius, for instance, doesn’t change the fact that they’re competing against a free product, terrestrial radio.
 
At the same time, it’s often the case that there are few other options available. Perhaps that’s why so much speculation went into the possibility of a General Motors and Chrysler tie up or why the government force-fed Merrill Lynch to Bank of America.
 
Considering that deals of necessity are driving the M&A market, I’m curious what distinguishes those that work – such as Wilbur Ross’s steel rollup – and those that don’t. From what I can tell, it all boils down to execution, but if anyone has any additional thoughts, I’d be interested to hear about what other factors may play a role.
 


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.
 

Technology Challenges in a Merger or Acquisition

10Technology Challenges in a Merger or Acquisition

Combining two operating businesses presents an unusual opportunity to create an integrated and effective web strategy that will improve the financial results of the new entity.

In the current economy, businesses with a viable web strategy for sales/marketing have posted 26% increases in revenue (year to year periods).  The way they’re doing it is by integrating CRM, email marketing, contact management, and web presence (read web sites).  Businesses going through merger and/or acquisition are faced with integrating two often-different, and sometimes outdated IT infrastructures.  

A web strategy, by virtue of what it takes to develop a viable solution, assuages the disparate integration problem and drives revenue.  The bottom line in any successful web strategy development effort is that the following gets studied:

– key messaging

– sales process

– the customer/prospect buying process

 

Integrating appropriate technology over the knowledge from that study creates the viable web strategy.

 

Here’s what happens in a successful web strategy deployment:

Niche markets are identified

Marketing/Sales campaigns are targeted

Key messaging is automated

 

When a company is making these thing happen, sales growth and revenue result.

 

There are a few consulting outfits who have the methodology and business relationships to pull this off.  Their problem is that business owners can point to countless failures of any one of the technology components mentioned previously; those are namely CRM, email marketing, web sites, and contact management.

 

Technology isn’t to blame, it’s the methodology that’s at fault in those implementations.  Give the result of your merger and acquisition activity a foundation for success.  Start with business process aimed at your specific markets and you won’t go wrong.

 

 

Joe Nemastil

The NT Group

612-279-2160

http://www.thentgroup.com

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. 

Effective Use Of Talent

fh000005EFFECTIVE USE OF TALENT

 

The challenge for the CEO of a company that wants to grow through acquisition is that the CEO is also charged with running the company.  This presents a conflict even in larger businesses that have a dedicated ‘corporate development’ or an ‘M&A’ function.  Too often, an ad hoc acquisition team is recruited from daily jobs and, as a result, neither the acquisition search nor the daily job is done as well as it must be.   No wonder that acquisitions take too long and rarely deliver the value expected. 

 

Compounding this is the attitude that “our industry is small” or “I know all the players”, but the truth is that until you take an objective and broad based look at the opportunities, you really don’t know what will fit the best.  An external perspective is of great value because an expert doesn’t bring a lot of  baggage in the form of preconceptions  about what might add real value.   

 

Consider using a ‘retained search’ firm for finding and researching acquisition targets.  An extensive and well-defined search will allow you and the team to focus on the highest and best use of your time – evaluating the best candidates for acquisition.    After all, the objective is to improve the success rate of your M&A transactions.   

 

Cliff  Allen, Packard Acquisitions

 

Researching and Profiling

Privately Held Companies for Acquisition

Office/Cell:  651-226-2853

www.packardacquisitions.com

 

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. 
 

Proper Financial Planning Before the Sale

water-lilies

“Proper financial planning before an equity event pays off.” 

 

 

 

 

In the high-stakes environment of a sale—evaluating offers, trying to close, overseeing the interests of the company and employees—business owners may overlook the impact of deal terms on their own finances, and thus risk leaving very large sums of money on the table.  Our experience has shown that integrating potential deal terms, key tax and estate planning strategies, and the owner’s personal financial goals can allow a business owner and his team of advisors to tailor the transaction most advantageously.

 

In a recent situation, we were able to assist an owner and his deal team in answering three key questions:

  1. What is the minimum offer they could accept?
  2. How should he invest the proceeds?
  3. What is the best strategy for transferring some of the proceeds to the next generation?

 

Understanding the minimum amount he could accept to meet his lifetime spending needs, while still transferring some wealth, was a key to entering negotiations.  Second, the owner had a misconception that he could invest the proceeds conservatively and meet his lifetime spending.  In reality, sustaining spending over the longer term with an all-bond portfolio was surprisingly difficult because of inflation and taxes.  And third, our analytical framework helped the owner and his estate planning attorney quantify the impact on the owner’s lifetime spending by gifting private shares before the transaction or utilizing a GRAT (Grantor Retained Annuity Trust) strategy to transfer wealth to his children.

 

In summary, the sale of a business often allows an owner’s spending, legacy and philanthropic goals to be met, and the likelihood of meeting these goals is much higher if strategies to meet them are mapped out well in advance of the transaction date.

 

Craig W. Kleis

Phone:    (612) 758-5041

Email:      craig.kleis@bernstein.com

www.bernstein.com.  

 

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. 

 

 

 

Brand Management in an M & A Environment

damon2         
Brand Management in an M&A Environment

In a solid and well-managed integration, prior planning of branding and transitioning customer loyalty and name recognition is a thoughtful and deliberate process. Leadership makes the time for careful consideration of how to maximize the brand equity and retention while removing ego from the equation.

Now lets talk reality. Have you ever seen the dominant player in a merger or acquisition impose their branding even when the product already has strong market share and loyalty? 

I’ll assert that the ego’s involved were bigger than the combined annual revenue of both companies.

There are too many variables for there to be one single solution or ‘best’ way to integrate brands. 

Consider the market – is it local, regional, national? (e.g. Micro-Brewery brand may not translate to a national market)
Consider the target demographic – are they fiercely loyal? (e.g. Apple Computer)
Consider the future – which brand is better positioned for the inevitable changes in the market place? (Sprint’s CDMA technology or Nextel’s iDEN technology)

In November of 1998, when Norwest Corp officially acquired Wells Fargo, the decision was made to use the Wells Fargo brand. As a native Minnesotan and Norwest customer, I had more affinity for the Norwest brand. But a dispassionate review of the facts shows that the right decision was made. Wells Fargo had a more extensive and storied past and was perceived to have better traction in a national market.

It might be that the driving force behind the merger or acquisition is about technology or distribution channels – but at some point, that technology or channel will be marketed to customers. So I’ll leave you with this:

No customers. No revenue.
Know customers. Know revenue.

Contributed by Damon Kocina, Owner, Strategic Graphics, Inc.

Strategic Graphics emphasizing an integrated design formula to tie Branding, Positioning, Print, Web, Trade Journal, and Trade Show events into a cohesive message and presentation.

 

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.

Exodus

ship2Badly managed corporate communication has caused the loss of many good employees and customers during the acquisition process.  Because it is a difficult topic with no single right answer and the financial diligence is so much more straight-forward, it is easily under valued, and often attended to as an after thought. Continue reading “Exodus”

Key Man Insurance

dscn0573

Key Man Insurance

 

The deal was almost done.  The owner was asked if he has prepared his key man for the transaction.  Specifically, he was asked if he had promised the key man a bonus for sticking around for 12 months to make sure that the new corporate owners would transition well into the client base and management team. 

 

This was a rich deal for the owner.  The owner assured us that he had generously compensated his key man.

 

Days before the transaction was to close the key man quit and moved across the street to another plating company.  The owner had thought our concerns overblown and had in fact done nothing to incentivize his key man. 

 

This deal fell out of bed with a non retrievable thump.

 

Tightness of wallet cost this seller millions of dollars (and nearly a heart attack) when his deal collapsed when the key man left.

 

In trying to patch up the transaction and talking with the key man, I discovered that he would have been happy with a small amount of money and a little more title but he was felt damaged by being treated like part of the woodwork.   Due diligence is more than validating the numbers. 


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

Practical Advice

Now is not the time to be recommending selling to your client.  Finance is tight and buyers are being brought deals that they could not have found with great effort a short time ago.  Values are suffering.  Selling is hard.

Could it be a good time to reevaluate growth through acquisition (even to firms more intent on internal growth or even exit planning?).

Here’s why it might be:

Strong players can make deals that will not be possible in strong markets.  Transactions must be made with the finance and terms that are available.  Money is tight and owner finance is far more common today than it was two years ago.

Growing companies prior to exit is a pragmatic approach to growing value, especially if the growth is low risk.

Many smaller and undercapitalized firms will accept buyouts on asset based agreements to procure some upside for their business rather than struggle through an unpredictable next year/s and risk losing everything.

Here’s how:

Build a smart team,

Create a smart plan from start to finish:

*determine precisely what fits–weighted averages criteria model

*plan for transition and monitoring of all aspects of transaction integration

Build a big list,

Contact everyone with a basic friendly invitation to talk

Manage and track information (use modern tools for data tracking)

Monitor progress and make adjustments    

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

 

 
 img_0548

Effective Acquisition Tools

inferno2

 

Determining the right fit, deal structure, finance, due diligence and integration, & knowing where the rocks are makes the difference between wasted assets and effort and a well planned and executed transaction.

Most of the acquisition teams I’ve interviewed have tons of experience making and closing deals. Each team member has skills in their own area of expertise.

Success requires a team with just the right talents for each step of the process. My experience has been that teams lack meaningful process and tools. Too often, methods are haphazard and results come from frustration and guesswork rather than measurement and planning.

No matter how bright the team is, the complexity of the process and the overwhelming amounts of information necessary to find and complete transactions with well chosen candidates simply keeps the failure rate high (about fifty percent of acquisitions destroy value).

Brokers and lead generating contacts provide brokered deals on a transaction based fee basis. It is not the ideal way to be introduced to candidates.

Here are a few steps to make your next acquisition add and not destroy value.

1)    Build a measurable criteria exercise as a critical first step. Every company goes through it in some fashion. Few make it a measurable tool for evaluation. It is not that hard once the definitions are numerically rated to give a ranking score to candidates.

2)    Learn how to bring candidates into the fold. Without the ability to contact the larger share of available well chosen candidates (database management and contact savvy), there is just too much left undone to be a representative sampling of the available market. How targets are contacted and what they are told has a great impact on the results you obtain (the quality and quantity of your candidate base).

3)     Spreadsheet hell. There are many bad ways to manage the profiling and research results from ten or more candidates. Information needs to be updated regularly. This becomes a big problem if spreadsheets or paper are used. An web tools are worth the investment to have access to current information (it makes information useful).

Unmanageable information is useless. Decisions will be made without the most important information if systems are not in place to make it readily available.

4)   Be well counseled for deal structure and finance. The markets at this time especially are hard to read. It is worth the investment to know what current market conditions (valuations/finance) are and not make decisions based on guesswork.

5)   Plan for due diligence, integration, and its attendant problems. There are many good companies, software, and process people to help with due diligence and transition.

Attending to the non financial aspects of due diligence and integration pays big dividends.

Mike@packardacquisions.com       

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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