When it comes to growing your business, one of the most effective approaches is to do so through acquisition. Just as with any major corporate plan, your acquisition plans need to be carefully drawn out in advance and aligned with your overall goals, otherwise your plans can easily become derailed.
Here is our guide to developing an acquisition strategy.
What is your ultimate goal?
Define what you want to achieve from your M&A activity in the form of an acquisition mission statement. This should clearly articulate what your ultimate goal is and become a key point of reference for when things become complicated later on.
Be clear and precise
Make sure that when you set your goals, you then adhere to them. If your aim is to acquire a company in the vertical supply chain for your core business, then do not become distracted by looking at other companies that fall outside of this remit, even if it appears that they would boost your existing portfolio.
Outline in detail as many core requirements as you can: the price you are willing to pay, the geography, the profitability, the industry sector, and any other factors that are essential – then stick to it.
Start your search
Whether you are conducting the search for acquisitions yourself, or you are delegating the task, now is the time to get into the marketplace. There are two particularly effective ways to start your search: you can approach a ‘middle man’ organization like an M & A consultancy, and you can conduct online research (businesses for sale, M&A activity platforms, etc).
Get in touch
When you have identified a company that you are interested in learning more about (with a view to ultimately acquiring it) you will need to make contact. This is a delicate part of the process – you cannot simply wander up to a representative at a tradeshow and ask about buying the company, for example.
If you are planning to make contact in person, do so discreetly. Otherwise, consider reaching out to the decision-maker through a direct email (if possible) or a professional network like LinkedIn.
Always have a plan
The importance of having a solid plan in place cannot be overstated. Before you enter into any discussions or even formal negotiations with your target company, go over your mission statement and core parameter requirements once again. You set those rules out for a reason, and now you have progressed a little further into the search you may have started picturing what the company can do under your control – a surefire way to become emotionally invested and willing to bend your own rules.
Avoid this emotional entanglement: you set out what you wanted and for what price right at the start –stick to that and you should be able to avoid buyer’s remorse.