Acquisition Begins At Home: Know Before You ‘Buy’

Bored with chasing “organic growth”?  Ready for some acquisition action?  

Stop right there.

What have they been telling you?  Have they told you that most acquisitions fail?  Trust this, really, they do.

Why? Ultimately it’s a failure in knowledge:  not knowing what the acquired company really is, not knowing what the consequences really will be, but, ultimately, not knowing what you yourself, the acquirer, is, from assets, to people, to operations.

Don’t be blinded by appetite: do due diligence and assume you know nothing when sitting down to figure out what is actually going on before starting in on valuation numbers….

How to plan a good acquisition?

Know what you need.
What problems, goals, or simply operating challenges could an acquisition solve?

Know what you can accept.
What geographies, agreements, debt, costs, and personalities could you accept?  Use your imagination.  What’s the range of acquisition realities that you and your advisers have seen or fretted elsewhere?  Go on to imagine

Know yourself.
Know where an acquisition could fit even before you go out into the marketplace. Know how your own company works, and where it doesn’t, before going out looking for action. Know your problems as well as your advantages and hopes.

Don’t get hung up on whether you are  “seeing negatives” by examining reality.

Moreover, don’t excuse yourself from these steps if someone around you intones the old bromide, “Have to take risks to make money”.  Yeah, that’s a good way to lose it too, and slide down the slippery slope like so many others.

© 2013. S Caroline Schroder. All Rights Reserved.