Expanding Through Acquisition
When a company is considering making a strategic acquisition there are a few key areas that all business owners or partners should consider before making the move. Acquisitions can be a smart and tactical way to reach new geographical markets, drive growth, provide supply chain security and gain access to superior technology and processes. Acquisitions can also be filled with risk and can be a costly undertaking if they are not planned thoroughly and undertaken with great care.
Here are 3 important things to consider before commencing the acquisition process
Analyse Your Own Business
Before beginning any acquisition process, it is essential to carefully look internally and fully understand what drives your business to success and what is holding you back.
What is it that you do exceptionally well and makes you stand out on the competitive landscape? Is it your mission, core values or that you operate in a niche market? Do you produce a market leading product? Do you have a strong employee culture that drives sales?
Identifying areas where there could be improvement or synergies is also important. What is it that you could do better? What is holding you back? Do you have inefficient processes? Is your plant and equipment up to date with technological advances?
To successfully undertake an effective strategic acquisition, you must first understand your goal in undertaking the acquisition, which in turn will help you identify what benefits a potential acquisition target can bring to you but also what benefits you can bring to the potential acquisition target.
Evaluate Your Risks
There are a lot of risks involved when acquiring another business and you must consider everything that could go wrong.
You will need to consider your own business’ current financial position. It is essential to know how much cash is freely available to invest in acquisitions. You must also identify the level of funding that will be required from other sources which will help you to develop a clear picture of the amount of money that your business will have available to invest into the acquisition and any additional costs that may arise.
You must also look beyond traditional financial risks. Are there any regulatory, political or macroeconomic conditions that could have an impact on the acquisition? The business landscape is constantly changing and something such as an increase in regulation or a change in political parties could cause an impact on the financial viability of the acquisition.
Define Your Search Criteria
After completing an analysis of your own business and all possible risk factors it is time to define your search criteria. This could be based on many factors including geographical penetration, customer mix, product lines, revenues and enterprise value. In order to achieve maximum value from the acquisition it is essential to ensure that your search criteria are referenced against your business’ own strengths, weaknesses and risk profile. The goal is to find a business that presents the best value to your business.
It is essential to ensure that thought and planning is undertaken prior to beginning the acquisition process to ensure the best outcome for all parties involved.
Quinn M&A’s expert team of business acquisition advisors can assist you to with all aspects of the business acquisition process. Contact Quinn M&A today on +612 9223 9166 or submit an Express Enquiry to arrange a confidential no cost consultation with one of our Senior Advisors