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Acquisitions 101

Fact: Acquisitions bring two (or more) companies together so that the acquiring company can grow.

Fact: There are two kinds of acquisitions. Okay, well, there are technically four kinds of acquisitions – a) public or b) private.  Here are the other two:

  • Acquiring companies to expand and add some additional market share to create an offensive or defensive position.
  • Using acquisitions as a strategy for rolling up a fragmented industry, which can be really, really powerful.

How-To:

1.  Decide what the acquisition objective is – and be very clear about it. Simple and straightforward. What’s the point?

2.  Is the target company in alignment with yours? Do they share the same values? Do they operate with the same (or very similar) organizational structure and culture?

3.  Due diligence valuation analysis. You need to analyze several years of financial records as well as forecast how the company will perform in tomorrow’s economy.

4.  Prepare yourself well. There are numerous procedures you’ll need to follow. You must understand how to navigate the legal process and the negotiating process, for example.

5.  Design an acquisition strategy. If you’re in business to win, you know research is a big part of creating success on several levels. Don’t go it alone. Winning strategies are the result of teamwork. Ensure you outline post-acquisition and implementation plans as well.

6.  Remember that people are key. Look for people you connect with, people you can work with. From start to finish, successful acquisitions depend on the “synergy” factor.

The above list is meant to be a quick introductory guide for acquisitions. Naturally, there is much more involved, but by using these stepping stones, you’ll be on the right path to taking that next big jump with your business.

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