How do you know the best time to grow your business through acquisition?
For business owners, one of the most important decisions made is how to best grow your business. However, growth can be a complicated proposition. How can you best achieve your desired growth goals? By adding more clients, more staff, new product and/or service offerings? Expanding into new verticals or new geographic markets? For a closely held business, growth is often achieved through all of the above. While organic growth is usually part of the plan, if your growth goals are more aggressive, a strategic acquisition strategy might be the right path for your company.
Did you know?
Google has acquired over 200 companies and has been acquiring on average, more than one company per week since 2010.
An acquisition is meant to create synergies that make the value of the resulting company greater than the sum of its original parts. Through the strategic acquisition of another company, the purchasing company can achieve instant economies of scale, additional efficiencies and enhanced market visibility. An acquisition can also increase the company’s client base, expand capabilities, provide access to additional talent and eliminate a competitor among a variety of other benefits.
Many successful companies of all sizes are choosing a strategic acquisition to complement, supplement and/or expand their current business.
For your company to be well-positioned enough to acquire another, there are four important criteria for you to consider:
- You Must be Prosperous– If your company is financially solid with a proven track record of success, you are well positioned to take advantage of acquisition opportunities.
- You Must Have a Solid Business Model – A solid business model should be reflected in a strategic plan that identifies acquisition needs. You should focus your company on what it does best and let that unify your corporate structure and vision.
- You Must Have a Strong Management Team –Having the right executives in place – and in the right roles within your company – will help smooth the transition, during and following an acquisition.
- You Must Have Access to Capital – Unless you already have the cash, you will need to make sure you have access to capital and the borrowing capacity needed to complete your acquisition.
Many organizations are interested in growing through acquisition; however do not have the time and resources necessary to thoroughly define their acquisition strategy and manage all the intricacies of the acquisition process from search to close. Throughout the acquisition process, it is important to work with a Strategic Acquisition Advisor (www.acquireandgrow.com) that helps you determine what to buy, how much to pay, how to structure the transaction and how to avoid numerous pitfalls.
For strong companies with sound management teams, a good business model and access to capital, it may be time for growth through acquisition.
If you are ready for growth through acquisition:
“Make sure your strategy drives the acquisition as opposed to the acquisition driving your strategy”
Author William Ludwig is the Director of Strategic Acquisitions for Sunbelt Business Advisors. He has led and played an integral role in both sell-side and buy-side engagements, providing unique insight into the sale, merger and acquisition of businesses. He has experience in a variety of deal making and deal sourcing aspects, including business analysis, business valuation, negotiation of purchase agreements and transaction due diligence. William has served as President/COO/Officer/Board Member and business owner for personal care manufacturing companies that have been sold in excess of $150 million.