One of the first questions to ask before pursuing a business acquisition is why do you want to acquire a business? You may have a long list of reasons, such as:
- More potential income from utilizing unused capacity more rapidly than organic growth might allow
- Increase the depth or quality of existing products or services
- Expand services and/or products to existing customers
- Obtain new customers in volume
- Add significant talent and increase employee base at all levels, including potential management, leadership and maybe even future owners of the business
- Geographic expansion which could help in recruiting and retaining employees or allow you to serve existing or future customers at levels and in ways you are currently unable to do
If you think you want to acquire a business for these purposes or have your own list of reasons, one thing is for certain: your business is going to change in a big way. Are you ready?
Now that you’ve determined that you are ready to build your organization by way of acquisition, much like constructing a new building you will need to architect, engineer and design what it is you hope to achieve.
Begin by evaluating your existing internal and external team members. You may have valued members of your organization who are great in their existing roles. If you are about to embark on a path to change your organization, will each of your key players be able to add value in locating, evaluating and eventually operating these potential additions to your organization?
Does your team have experience either in growing businesses by acquisition or working in larger organizations that will prove beneficial? Will they thrive in organizations with more direct reports and with additional leaders with different leadership styles? It is important to assess what your current and future organization charts and roles will look like.
This is just the beginning of laying the foundation on which you will build the next generation of your business. Does your company have the capacity to absorb new roles, will you need to hire or are you expecting to acquire the people you’ll need to get to the next level in each of your business units? You’ll need to consider IT, marketing, administration, accounting and finance, operations, sales, production, customer service and perhaps others.
In addition to your internal team, do you have the right external team in place to help you define, execute and more than achieve your goals?
The hard dollars and soft costs you’re about to incur in making your acquisition investments come in many different forms. These costs can vary by as much as five or ten times depending on who your external team is and how you utilize those resources. It is imperative you have an external team that complements your internal skill sets and the time you are willing to invest internally to allow you to make the most of your opportunities. More often than not, most of your internal team has “day jobs” that absorb most, if not all, of their time. An acquisition can be a large investment of all of your resources from time and money to your brand, and it needs full time attention.
Has your external team had the experience of locating, buying, operating and evolving businesses? Do team members have a volume of experience (not just one or a few times a year) in assisting others in locating, evaluating, negotiating, closing and executing in areas such as accounting, tax, legal transactions, intellectual property, finance, labor law, insurance and others that may apply?
Growing by way of acquisition can be an exciting, all-consuming time if you allow it to be. It is important to understand why your organization wants to evolve this way and then determine if you have the right internal and external team members to make it happen.
The best teams have a collection of experience both internally and externally, and your team needs a leader who will see that there is a unified goal and a clearly defined path. Each team member must understand what success looks like.
Are you ready to assemble your teams? Are you ready to build your playbook? Are you ready to define success? Are you ready to activate your plans?