Looking To Grow Your Business Through Acquisition
How Do You Make Sure Your Not Buying A Pup
If your are looking to grow your business then growth through acquisition can be the fastest and most effective way.
Beware only 50% of acquisitions are successful so how can you improve your chances of success.
In this article we will consider
- Seven questions you need to ask pre acquisition
- Eight acquisition strategies
- Three acquisition numbers to consider

Seven Questions To Ask Pre Acquisition
- Why do I really want it – vanity / sanity
- Have I done my sums – overall it will inevitably cost significantly more than expected
- Does it make financial sense
- Can I live with the outcomes – 50% are unsuccessful
- Do I have a plan – Many businesses don’t have a clear strategic plan for their core business let alone an acquisition
- How will it fit in – see point 6
- How long will it take – Guess what it will take longer than expected (and consume a lot of time)
Growth Acquisition Strategies
- Acquisition will allow the existing business to improve its performance
- Acquisition will consolidate the industry and remove capacity
- Acquisition will accelerate market access
- Acquisition will allow you to acquire skills or technology (as opposed to doing your own development)
- Acquisition will allow you to pick a winner early
- Roll up – buy lots of little businesses to achieve a consolidation. Difficult as it becomes obvious what your doing so prices start to increase
- Consolidate to improve behaviour – need to get senior players on board
- Transformational merger
3 numbers to consider
- Your maximum price
- What the vendor will accept (you need to know their circumstances health, family, debt etc)
- What values are really being achieved
Looking to grow your business through acquisition
Remember 50% success on acquisitions could you achieve growth organically, have you got clear strategies in place to maximise organic growth. For more information on business development click here
Acquiring A Business 7 Questions You Need To Ask
- Why do you want it – this seems like a simple question but answering it truthfully will allow you to make sure that you are not just looking for a vanity purchase and have completely identified the rationale for the purchase
- Have you done your sums – so many acquisitions start with the desire to increase the overall value of teh organisation. So if we are a £20 million company purchasing a £5 million pound company grows our business by 25% . If only it was that simple it is critical that detailed analysis is completed to see if the acquisition will actually help in your growth
- Will it make financial returns – this links closely to point 2 in terms of will you be able to do things as a result of the business that will mean you will grow more profitably and faster than if you just grew organically
- Can you live with any outcome – if your acquisition is successful are you prepared for the pain and heartache that may follow the purchase
- Do you have a plan – so 100 days after acquiring the business are you absolutely certain where / how you will have progressed. A detailed plan of how you plan to manage the acquisition is a necessity
- How will it be fitted in – will the acquisition be integrated into existing operations or will it remain a standalone independent operation. In most cases elements of integration are required to allow for cost savings etc
- How long will you have to wait for benefit. It could be that you are simply acquiring in order to gain a customer list at which point you will transfer customers into the core activities. If you are buying IPR it could be many years before you see a return on investment
Only 50% of acquisitions are successful
With only a 50% success rate on acquisitions there are 4 points to consider
- Follow the money
- Resolve any people or power issues “Fast”
- Ensure that the deal structure doesn’t impact on change
- Make sure that due diligence goes well beyond just the financial issues
Acquiring A Business 7 Questions You Need To Ask
If you are looking to grow your business by acquiring another business there are 7 questions you need to ask.
In this article we have considered the questions that cover Sums, Actions, Outcomes & Fit
If you would like to know more about Customer Acquisitions contact Andrew Goode MBA, MSc, FCIM Click here to arrange a call
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