Getting your strategy right

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The decision to acquire a business is rarely straightforward. Having then made the decision, it can be a long and difficult process to find the right target.

By Tim Mills, partner, PM+M.

The reasons for making an acquisition can vary from simply buying a competitor, to buying new products or service lines or gaining immediate access to markets not available to the current business.

Whatever the reasons for making an acquisition, they will often form part of a long-term strategy, which may include plans to ensure the current business is protected.

Considering acquisitions as a form of defence is good advice, assuming the acquisitions undertaken are fully researched and planned.

Time should be invested by business owners and their advisers to formulate the key requirements being sought in an acquisition and the potential benefits it will bring.

It is important to remember that targets that are attractive to you as a potential acquirer, will undoubtedly appeal to many of your competitors.

It is essential when looking at targets to make a decision on how important this business is going to be to your overall strategy. This will help decide how far you should go with an offer should other interested parties also make bids.

Clearly there will be financial limits to take into account when making an offer and there will always be occasions when a competitor just has deeper pockets.

Ensuring that you understand the key values held by sellers may allow you to structure an offer which is more attractive to them than those of competing bidders.

Undertake some research and get to know the target business and its owners. It may be the difference between a successful bid and failure. Having done your homework, get your offer across to the sellers. Do not give your competitors the opportunity to make the first bid because as we all know, attack is the best form of defence.