Growth through acquisition
An acquisition can be an attractive way for a business to achieve growth through the purchase of a complementary product portfolio, entry into new geographical markets and the securing of technical skills or innovative technology.
Value can be delivered through expanding the client base, reducing costs, improving margins and ultimately improving both profits and cash flow. There are several fundamental steps to consider in contemplating an acquisition:
- Planning: Can you identify a clear strategy that will set out the rationale for the acquisition, clearly establishing the financial and commercial objectives.
- Value proposition: Can you identify how value will be created and if the acquisition will allow the company to differentiate itself from the competition.
- Funding: How will the acquisition be funded. Do you have sufficient cash resources or are you aware of the range of debt and equity options that are available in the market.
The process of an acquisition follows five key components to result in a strong and effective transaction:
- Advice. Ensure that you take commercial, experienced advice through the transaction.
- Win-win. The acquisition needs to be attractive to the vendors whilst also creating value for the acquisitive company.
- Well planned. The success of the acquisition relies upon the critical details of the transition being mapped out.
- Due diligence. Make sure that you understand the detailed operations of the target business.
- Integration. The acquisition has to be integrated into the group and therefore a 100 day plan should be prepared which outlines the initial strategy.
An acquisition can be transformational for a business, creating real value. The Pierce Corporate Finance team has extensive commercial experience to guide you through the complexities of a transaction.