Business Acquisitions – An Overview

I was chatting to someone recently about them acquiring another business which they are looking at integrating into their current business operation. In the scale of things it would represent about a 25% growth for them.

While we know acquiring another business can be a great way to grow your business and grow value, we talked about the need to approach the process with caution, as there are many risks and pitfalls that can derail the success of an acquisition. Some of the things that we chatted about were as follows.

Due Diligence

Be led by the facts, not your heart. Before making any decisions, it's crucial to go through a thorough due diligence process. Look at the financials, how the acquisition will be funded, new cashflows and budgets, contracts, customer base, and any other relevant information to make sure that the company is a good fit for the existing business and that the deal makes sense financially. The idea here is not to look for evidence that will validate the idea of an acquisition, but to look objectively at the facts. When you are going through this process, I’m a fan of keeping your accountant and lawyer in the loop early on to get their perspective.

Culture Fit

We chatted about making sure that the culture and values of the people in the newly acquired company are aligned with the existing business. The aim is to have a smooth integration and minimize any disruptions to either business. Periods of change bring uncertainty and the aim is to reduce any fears or concerns.

Integration Plan

Think about the plan for integrating the acquired company into the existing business. This should include a timeline, budget, who does what, even who sits where and a clear communication plan with all the various stakeholders. Make sure that you're prepared to handle any challenges that may arise during the integration process.

Good To Great: Why Some Companies Make The Leap ... And Others Don't – Jim Collins

If you’ve read some of my other material, or seen some of my vlogs, you’ll know I am a fan of Jim Collins, author of the best-selling book Good to Great, who says that a key factor in successful acquisitions is having a strong and experienced management team in place. He also stresses the importance of maintaining the acquired company's identity and preserving its unique culture.

Playing to Win: How Strategy Really Works – Roger Martin

In 2019 (I write the date in the cover of the book), I read Playing to Win: How Strategy Really Works, written by Roger Martin from the Rotman School of Management & A.G. Laffley, former CEO of Procter & Gamble. They emphasised the importance of having a clear and focused strategy when acquiring another business. The book also stressed the importance of aligning all aspects of the company's operations, including culture and processes, to support the acquisition strategy. They believed that a company must have a consistent and integrated approach to strategy, regardless of whether it's growing through acquisition or organic growth.

Thinking of a Business Acquisition? Let's talk.

So if a business acquisition fits your strategy, remember to have a strong due diligence process, give consideration to the culture and develop an integration plan that will allow the acquisition to merge into your existing business without too much disruption.

And if you’d like to learn more about how PlanA Consulting can help you out with a Business Acquisition, then please contact me, Hutch, today on 021 748 142 or john@planaconsulting.co.nz

Kind regards, Hutch.