Another weekend treat, a complimentary extract from The Acquirer’s Playbook. Stage 6 is one of the key engine rooms for successful acquisitions. It will give you perspective and allow you to prioritize who you talk to.
The M&A tables suggest we are entering a period of frantic deal-making, as busy as the previous high in 2007. However, buying the wrong company can live with you forever. Improve your odds by adopting a professional process for acquisitions.
The key to this phase is finding targets that truly match your Acquisition Profile (shopping list) and being ready to discuss how you would integrate the target into your existing business.
In acquisitions you are constantly worrying about page 10 when you are on page 3! I want you at the end of Phase 2 to be ready to engage in an insightful conversation with a business owner. That takes hard work and homework. You are mimicking post- acquisition integration thinking right now, not once you own the business. As practiced acquirers understand, the aim is to know more about the target than they know about themselves.
The acquisition search process has been transformed over the last 10 years as information increasingly comes online.
Ideas to find targets include:
- Private Equity portfolios
- Trade shows attendee companies
- 5000 list
- Software 500 list
- Gartner sector reviews, Hoovers, Keynote, Dunn & Bradstreet, American City Business Journals, Ward’s Business Directory
- All sectors/segments have trade bodies with members
- Your own sales teams, technical staff, marketing teams (assuming it is not confidential)
- Influencers, lawyers, accountants, suppliers are all capable of generating ideas
Collating Key Facts – Practical Tips
I suggest pulling this together in three strands: market intelligence, target info on people, and all non-people information on the target including financials, products, customers, distribution channels, facilities, etc. Remember this is just the initial gathering of key facts on priority targets. Detailed due diligence covering a plethora of subjects comes later.
Market information should include all the key players, relative size, USPs, key trends, forecasts, threats and opportunities. Ask yourself, what would an investor need to know if you were summarizing the market and the companies within it? What factors are currently undermining your business model?
Target information on each target will vary slightly depending on the sector but needs to include (and this will not be easy for private companies):
- Shareholders
- Sales for the last 5 years
- # of employees
- Profitability
- Main products/services and key business results
- Key customers
- Office locations
- Awards
- Sales channels
- Press Coverage
- Social Media summary
- Estimated market share
People information should include:
- Organization charts
- Bios of the management team
- LinkedIn profiles of key staff
- Google results of key staff
- Technorati ranking of their blogs, twitter rankings, social media ratings
As you start to assess these companies remember to drive post-acquisition integration thinking into your approach. Before you meet a target you need to have a rough idea, how you would run it. This view will be tested many times but that initial view is essential as a baseline.
Involved in acquisitions/MBOs/PE deals/Exits? Reach out to compare notes -Ian@TPPBoston.com.
