Strategy
It all starts with why: what are we aiming for as entrepreneurs? What business goal do we want to achieve… too often we hear “I want to buy, because I can afford it and it will bring me change”. When we get inquiries with industry, business model, target size and possible geography, it’s a sign of thinking – the rest of the process could go much better! We know we won’t find perfection, but if we aim for the stars, the chances of ending up with a handful of mud are greatly reduced.
Approach
To proceed, you need resources. A major step is to identify possible sources of acquisition. This step requires time and skill. When an entrepreneur is approached, he quickly thinks he can sell beyond value! Then it’s time to validate what’s been put forward, understand the company, discuss the issues, negotiate everything, carry out due diligence, align the divergent objectives of the various players involved, and reach a closing! The success rate for this process varies widely. There’s no such thing as magical thinking…
Transaction
Once the stakeholders are aligned, the transaction must be a win-win situation. Both in terms of price (if the company is sold under unrealistic standards, it won’t last) and conditions. Sometimes, too much energy is invested in negotiations, including a purchase contract that looks perfect on paper, and then there are no positive vibes left for a smooth business transfer. With the right support, everyone’s interests can be balanced.
Integration
Change management is often the least planned part of the process for SMEs. How are we going to announce the change to the teams, and what means do we have to manage the uncertainties? If we’ve assessed the culture, what do we do with it? As simple as managing Friday afternoons in the summer – is fairness in place, can there be bonuses – will teams have the same motivation? Then, from a purely financial point of view, acquisitions often aim for synergies, or net cost reductions. Have we done our homework? Do we have concrete plans for achieving these synergies or cost reductions? Unfortunately, numerous deals will not deliver on results, as buyers under invest time after the transaction in comparison to the time it took before. Do plan to pursue the time invested.