Playing At Acquisition

alligatorBroker driven and opportunistic deals are appealing and the excitement of the chase builds quickly.  Some of the team members have done a few acquisitions, we are smart, successful, and experts in our field, why wouldn’t we be winners at the game of acquisition?

I like making brick paths and walls and feel a great sense of accomplishment when I have completed some small structure with bricks in a home project.

But when I watch a real brick layer complete a commercial project, with what looks like a thousand precisely placed bricks in one afternoon, I am aware of the skill and practice being demonstrated. I do not compete. I’m pretty sure acquisitions involve more complexities and pitfalls than bricklaying.

50% of acquisitions don’t make it to the closing table, and according to Wharton, Harvard, and Deloitte, 60% of acquisitions destroy value. and over 80% don’t add a sustainable competitive edge.

Then there are the giant losses incurred by completing seriously flawed transactions.  A recent client was still paying for a bad acquisition ten years later (losses exceeded the purchase price).

It’s allot more fun to complete a deal that took a little longer and see it add value than it is to spend years undoing or making up for an imperfect transaction.

Knowledge is power – experience our short free webinar.


An Uncomfortable Family Reunion

ensenadaAA business owner, we’ll call him John, grew his rebuilt truck parts business over 30 years to 20+MM – no small achievement. John’s  company was a major employer in a small town. John himself was a celebrated benefactor at school fundraisers and church events. Continue reading “An Uncomfortable Family Reunion”

When Acquisitions Hurt

Companies losing money due to poorly chosen acquisition targets outweigh those profiting from such transactions by large measures.

They can be seen cobbling together broker driven deals nursed & prodded to closing over the objections of their advisors (who still have to be paid when the deal falls apart or implodes later). Continue reading “When Acquisitions Hurt”


If Half of Acquisitions Don’t Add Value & …

water-liliesIf half of acquisitions don’t make it to the closing table, how can you & your team turn the odds to your favor and not waste time & resources on this expensive & risking endeavor?

Identifying what doesn’t work can be a good first step. Continue reading “If Half of Acquisitions Don’t Add Value & …”


Corporate Communications & Successful Acquisitions

african art 2 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. Continue reading “Corporate Communications & Successful Acquisitions”


Acquisition/Joint Venture Workshop

skeleton on rockBetter 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) Continue reading “Acquisition/Joint Venture Workshop”


Warren Buffet is Still Right

whale-shark-peschak_50627_600x450Last 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. Continue reading “Warren Buffet is Still Right”


Packard Acquisition Presentation May 4th Edina Country Club

Packard Invitation May 4th, PackardInvite-April6 11:30-1  Edina Country Club Edina MN Continue reading “Packard Acquisition Presentation May 4th Edina Country Club”


Acquisition Activity Cost Benefit Analysis

superior shipAre you are on a board of, or an active member of an acquisitive company?

Does the company have procedures in place to monitor the effectiveness of current acquisition strategy? Continue reading “Acquisition Activity Cost Benefit Analysis”



Better Process = Better Candidates
Better Transactions

* Acquire key tools to help your company effectively locate the right acquisition/joint venture candidates and complete the best transaction with the greatest efficiency.

* Discover the best strategy, resources, & process (learn where to find the biggest available pool of qualified candidates, how to attract them, & how to manage multiple candidates over time).

* Create a meaningful corporate criteria model (to measure candidates by).

* Get the best information management systems & learn the difference between golden information & useless data.

Negotiations, integration, and relationships (from beginning to end) successful acquisitions require financial and non financial understanding and monitoring.

Combine team building with effective methods, resources, and training.

Organize your team around a powerful approach to finding the best targets and completing successful acquisitions for your company.

On your site or at our location.




Join Our Online InterActive Acquisition Discussion

We’ve launched a discussion group on LinkedIn titled Finding & Researching Better Acquisition Targets.

Its purpose is to discover and improve tools and process for finding better acquisition and joint venture targets, improving the quality and quantity of prospects & taking risk out of acquisition and joint venture.


Preparing Yourself for an Acquisition

fl020002Preparing Yourself for an Acquisition


There are a few things to consider when approaching your commercial banker to help finance an upcoming acquisition.


Given the current economic conditions, you may be facing an opportunity to acquire a long-time competitor who is now struggling. Acquisition might open the door to a new market, or it might mean the addition or expansion of a line of complementary products.


When it comes to financing the acquisition, you’ll no doubt talk to your commercial banker. But how about engaging the bank beforehand to act as a sounding board on the merit of the acquisition itself?


Your banker should act as an impartial third party in helping clients in acquisition mode, beginning at the exploration stage. While the banker should certainly have a strong desire to help clients close a deal, he or she must remain impartial and provide direct, honest feedback based on years of experience.


Let’s take a look at some critical issues to keep in mind when considering an acquisition:


1. Payback. Before making that critical “go-no go” decision, you need to measure objectively the payback period on the purchase price. How long will it take for this to pay for itself? Remember, it is important to pay only for the value your acquisition target has created. The value that your company creates belongs to you already.


2. Not So Sudden Impact. Set realistic expectations. Do not underestimate the challenge of achieving synergy and savings. Assume that it will take more time than you are estimating. 


3. Collateral is King? Remember, however, that advance rates on many asset types have decreased during this economic downturn.


4. Structurally Sound. The important thing here is to keep in mind that all the pieces of the deal have to cash flow. With bank financing playing a smaller role in the overall structure of acquisitions, sellers are being asked to shoulder more of the risk and buyers are putting more equity on the table.


Showing your commercial banker that you have considered each of these four areas will contribute significantly to getting the deal done, quickly and efficiently.


Steve Stoup, Senior Vice President

Fidelity Bank

(952) 830-7230   


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. 

Risk Management and Valuation

the-carina-nebula-shown-below-contains-eta-carinae-a-massive-star-around-100-times-the-size-of-the-sunFailure to assess business risks in an acquisition impacts value Continue reading “Risk Management and Valuation”


Better Processs = Better Candidates


Corporate buyers with access to cash receive far better returns on their acquisition dollars during recessions. Troubled deals that would be done in good times are being liquidated, mundane companies are finding it hard to get a fair multiple, and cash is at a premium. 

All this points to acquisition as a growth strategy.  


Those that discipline their acquisition process will improve their return on investment. 

Advisors can help their clients to: 

* assemble a smart team that will include the talent they need. It may include other outside advisors. 

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

* 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. 

And most important, to see that 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. 

2009 will be a terrific year for a disciplined approach to strategic acquisition, Multiples are low, opportunities are stacking up, cash is hard to find and owner financing will be abundant. 

Note: The failure rate for an undisciplined approach to acquisition still exceeds fifty percent. It pays to do your homework.                              

MTikkanen@ (we can help)

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.

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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;                               



Risky Ventures

skeleton on rockPrivate Equity’s Appetite for Risk

Risk – a four letter word if there ever was one – is reclaiming its rightful role in acquisitions. The last several years have seen a marked disdain for the concept of ‘possible adverse consequences’. Continue reading “Risky Ventures”


Effective Acquisition Tools



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.       

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

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