How To Complete A Successful Acquisition – The Basics

10 February 2014 | Uncategorized | Tags: ,

I previously worked for a company that was known as the vulture of the financial industry in the UK. Its growth was due to its acquisition of several closed book insurance businesses and it gained quite a reputation. Each one of these acquisitions was different. If you are going to dip your toes into this arena, it is one of the most important facts that you will need to accept. Once you know this then there are some standard rules that will help make any acquisition a success.


 Always Plan and Research:

The root of many failed acquisitions is a lack of effort and understanding in the planning stages. Acquisitions are more of an art form than a science. Success depends a lot on knowing and appreciating the financial and strategic goals that you are trying to achieve. Why are you looking to target a specific company? What benefits will a merger or acquisition bring either of you? It may be that the company which you wish to target is not actually for sale. You will need a good pitch to persuade the owner that it is in the interest of both companies to go ahead. Having a strategy is important. What are the objectives? How are you going to finance the deal? What are the criteria to evaluate? And what does your timetable look like? Before you do anything else, write an Acquisition Plan containing answers to these questions.


Get A Good Team Around You:

Any acquisition or merger is only as good as the people involved in it. Make sure that the team involved in it contains trusted people from Finance, Sales and Marketing and Operations. Also consider inviting advice from external sources which have professional skills that are relevant, such as Lawyers, Accountants and Investment Bankers. A good Investment Banker will provide a lot of valuable resources and have skills in valuation and negotiations which may be very useful to companies inexperienced in such things. You will find that some Investment Bankers also specialise in certain areas of industry and can provide special skills in such areas, for example Healthcare Investment Banking.


Get The Valuation Right:

This is always a difficult part of the process and requires a great deal of skill. Having people that are experienced in such matters is exceptionally important as it can be the downfall of many deals. In many ways the value of any business can be considered to be in the eye of the beholder. Dependent upon the ultimate goal of uniting the two companies a company may be of more value to one company than to another. Obviously the market value of any company comes into play. So too though must strategic value, and taking into consideration the proposed earnings under any new ownership is important.


There is a lot to consider when it comes to getting any acquisition right. There are numerous pitfalls and places where it may go wrong. Considering any of these upfront before you even start is always a good thing to do. It enables you to tackle problems head-on and hopefully leads to success.


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