Get The Full Benefits from an Acquisition

Many businesses use acquisitions as a way to improve market share, enter new markets, acquire new technology, acquire operational capabilities, improve revenue growth or profitability, and in some cases, to eliminate competition. Whatever the reason or intended outcome, often acquisitions do not achieve short term, and some times long term objectives, because they are not assessed thoroughly, planned properly, or the transition of the acquired business into the acquiring business is handled poorly. The first key to a successful acquisition is to choose the right business to acquire, not just based on financial performance and net worth, but based on how well the acquisition can strengthen the acquiring business where it has weaknesses, how instrumental the acquisition is able to contribute to achieving short and long term business objectives, and what it will take to successfully integrate the acquisition into the acquiring business. The second key to a successful acquisition is to assess risk in the areas of regulatory compliance, liability, customer satisfaction and acceptance, financial stability and operational hazards to determine if there are any “red flags” that might impede achieving the objectives for the acquisition. Sometimes “red flags” are there at the time the acquisition is occurring, but don’t rear their ugly head until after it is complete. The third key to a successful acquisition is planning the transition prior to committing to a sale price and closing on the sale. By identifying significant risks and planning the transition ahead of time, the impact of the acquisition on the acquiring business can be assessed and factored into the sale price, conditions of sale and timeline for the expected return on investment to occur to meet expectations. If a reasonable sale can be negotiated, then the transition of the acquired business into the acquiring business will go much smoother and as intended leading to meeting all short and long term objectives, and attaining all the anticipated benefits from the acquisition.

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