WHAT SPECIFIC ATTRIBUTES MAKE AN ACQUISITION AN ATTRACTIVE STRATEGY?
Acquirers are interested in growing their own businesses and an acquisition is one of the options available to them, and usually provides a faster track to growth than organic growth.
In addition, they can be interested in other benefits, for example:
- geographic expansion
- customer base
- customer spread, i.e. for a retail business a large number of customers, for a
- manufacturer a number of blue-chip customers, such that there is no undue reliance
- on a small number of customers
- contract durations
- repeat business patterns
- Intellectual Property Rights
- depth and quality of management
- uniqueness and competitiveness of products and services
- scalability of products and/or services
- market position and brand
- systems and processes, particularly relating to winning new business
- quality of service
- the “halo” effect, the extra revenues and profits that can be gained from e.g. cross selling to one another’s customers or improved supply etc
- to build the business in advance of selling it.
For each of these, the key question is – “what would it cost and how long would it take to add these (the “extra” criteria that you have that means something to us) to our own business ourselves, organically?”
The right Acquirer, for whom the Seller provides the most amount of value, may well be persuaded to share some of the value with the Seller and reflect that in the purchase price.
What UK Business Advisors Acquisition Planning advisors can do to assist your business. Real life experience, strategic advice and tactical support.
- Develop the value enhancing strategy
- Action-focused Business Planning
- Assistance with what follows next – a Business Support Programme to help you implement and deliver the plans
- Fund raising and acquisitions assistance
More to follow next time. Please feel free to get in touch with Peter Kroeger for more information.