Beyond Financial Due Diligence

By Cary Tutelman

When companies are considering acquiring another company, they do extensive due diligence. They analyze balance sheets, income statements, debt history, customer lists, physical assets and equipment, the product and/or service offerings, etc. This is done to make sure that the buyer knows what they are buying.

However, there is another aspect of due diligence that is typically not done. I call it the non-financial audit. This is an analysis of the organization: its strengths and weaknesses, biggest needs, strength of management, culture, values, work environment and impact of a sale on customers and employees.

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.

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.

Corporate Communications & Successful Acquisitions

It’s often the very best people that bail out when acquisitions are badly managed.

Corporate communication can save good employees and customers during the acquisition process if used wisely. The loss of key people and customers is extremely costly.  The investments in team and resources to preempt these losses are quite modest in comparison.

Because it is a difficult topic with no single right answer, management often fears saying anything that might disturb the troops.  When nothing is said & rumors become the key to information, employees ride the emotional roller coaster that drives those who can move on to consider other possibilities.

The New Science of Search; Finding Buyer/Partner Candidates Without Brokers

Never before has finding a very large number of  qualified candidates in a specific industry been easier.  With the tools available today, finding just the right people in just the right companies is now an affordable undertaking.

Quit Wasting Resources & Start Finding Acquisition Targets Effectively

Has your team spent time & money investigating poor candidates and bad ideas?

Are there procedures in place to monitor the effectiveness of current acquisition strategy?

What would be discovered if a cost benefit analysis were executed?

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

Over 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.

Packard’s New Online Personalized Corporate Search Webinar

Sign up for Packard’s personalized online search clinic & discover advanced tools & process for finding the very best target candidates.

Send an email to;

Mike@packardacquisitons.com

Enhancing Shareholder Value

I had a mechanical engineer once who had an attitude disorder.  For some odd reason, he didn’t like getting impossible assignments.  Whenever I said, “let’s do this improbable thing….”  He’d give me his “moon rock” lecture.

The lecture goes something like this.  “So, you want me to build a system that fits in 3 cubic inches?  No problem.  All we need is some moon rocks.”

Warren Buffets Of The World vs The Uninitiated

A local family business unfamiliar with acquisitions,  hired a seasoned president (John) who claimed to have a significant M & A background.  My first meeting with John clearly demonstrated that he had not developed meaningful criteria for target candidates or an effective plan for finding them.

Experience PA’s Personalized Online Acquisition Web Clinic

Participate in a short impactful discussion about acquisition that will connect you with the right tools & process to find the best target candidates for low risk acquisitions & quit wasting time chasing dead ends.

Contact me for more information

Mike@packardacquisitions.com 952-542-9318

Mike Tikkanen

www.PackardAcquisitions.com

 

 

Technology Assessment in Acquisitions

There are only three things that stand in the way of the successful acquisition of technology:

1.  Excessive brilliance
2. Insufficient brilliance
3. Natural law

A Great Technology Due Diligence Story

Food Tasters for the King Food is an important part of a balanced diet.Fran Lebowitz

A few decades ago, I was an entrepreneur with visions of gold and a technology idea that even Frost & Sullivan thought was worthy of a 50 page report for a measly $2,500 per copy. Today, having carried that idea from my basement to a $100 million company on NASDAQ, I’m a partner in a firm that sits squarely between the capitalist and the technologist, serving that delicate roll of matchmaker between the money haves and the money wants. We call ourselves “food tasters for the kings.”

Acquisition/Joint Venture Workshop

Better Process = Better Candidates = Better Transactions

83% fail to create a sustainable competitive advantage (Wharton)

66% fail to add shareholder value (Harvard)

60% destroy company value (Deloitte)

Packard Acquisition Presentation June 1st Edina Country Club

Join our small group presentation at the Edina Country Club June 1st  1130 – 1pm, and learn about the tools, process, & and a non brokered approach to finding the best acquisition and joint venture candidates for your clients.

Beyond Acquisition

The old model of acquisition has proven to have a big downside.

Studies at Harvard, Deloitte, Wharton and other credible organizations show that more than half of acquisitions destroy value, and that only 25% of transactions create sustainable ongoing value (these numbers don’t reflect acquisition efforts that fail to be completed).

How to become part of the 25% that create sustainable ongoing value?

Warren Buffet is Still Right

Last weeks Star Tribune article on the negative impact the Albertson’s acquisition is having on Super Value was a powerful reminder of Moody’s report that half of all non financial business failures in 2009 were Private Equity owned.

Packard Acquisition Presentation May 4th Edina Country Club

Packard Invitation May 4th, PackardInvite-April6 11:30-1  Edina Country Club Edina MN

2011 Acquisition Climate

These past two years have cut and squeezed fat out operations and forced even the best run companies to revisit efficiencies, layoffs, and cost reduction.

Internal growth in this environment has been tough.

Discovering Acquisition Risk; Share A Story

Buying a company and not discovering that a small segment of its manufactured parts were installed on airplanes all over the world and never properly insured by the seller is risky.

The purchase of a union run manufacturing shop where the employees considered the deal so onerous that workers cut the wires on over 20 million dollars worth of electric motors that were being packaged and shipped to the buyer was an unnecessary disaster.

How do smart companies guard against risk?

Share a story or a secret for discovering acquisition risk.

No More Stubbed Toe; The Secret To A Successful Acquisition

Manage the Risk By Building A Superior Team & Creating the Best Tools.

Acquisition Workshops; Investing In Best Practices

What’s it worth to have the right tools and process to lower the risk inherent in the complex task of finding, executing, and integrating your next acquisition?

A better question might be, what are the costs of falling short in one of these areas?

It’s not just time, investment, and lost opportunity, but the potential of completing an imperfect acquisition, that keeps your CFO from sleeping at night.

Fill out our form http://pacquisitions.com/acq_snapshot.cfm
or,

Contact me if you would like to know more;

Mike@packardacquisitions.com

952-542-9318

Reducing Risk in Acquisition; Building The Best Team

It takes no special talent to find companies to look at, make offers, arrange finance, & close deals. Any good broker can fill your plate with attractive companies to review.

This explains why most deals don’t add value.

Deals that add value are those that were well defined and researched on the front end by smart people using high value process and followed up with good negotiating, due diligence, and integration teams.

A failure in any of these areas has the potential of making a giant mistake. Half of all non-financial business failures were private equity owned last year.

Even the people that should know how to make acquisitions are making big mistakes.

Even the best team can still make mistakes, but far fewer and much smaller.

More On Reducing Risk

Share your stories and comments

Wow For RainSource Conference

I attended the high energy RainSource Conference in Bloomington last week and was really impressed with the organization and connectivity at the conference. It was alive with smart people and great ideas.

Choices (it’s all about risk)

This company had struggled for years to reach profitability when I received the call to talk to the founder about his choices in the marketplace.

Why not consider a back up plan in case the funding source you are counting on does not materialize? After all, being a partner in your project is better than failure, which often has personal repercussions beyond the business losses.