Insights

Lessons From Experienced Buyers

In a previous post, I mentioned that a structured series of smaller acquisitions over time is often a wiser course of action than one larger, splashy purchase. An acquisition strategy built in this way has a lot of powerful advantages in growing your business over the long term, but today I want to talk about a side benefit to this approach that isn’t often discussed… what I call Acquisition Maturity.

No matter how skilled and experienced you are at running your company, the first acquisition process is still going to be a trip through uncharted territory for you. It will ask things of you that aren’t part of anyone’s daily routine in business. Each successive trip is easier to navigate as you progressively map the terrain and start to recognize the landmarks. The first time through it is the hardest.

This increasing familiarity will really help the process feel less disruptive to business as usual, and you’ll accomplish more in less time as the procedures become routine, but you only gain these things from direct experience.

You can learn from those who’ve gone before you though. In this post, I want to offer you a small collection of lessons that veterans of the acquisition process have learned, and how you might apply them to your first time through to your advantage.

1. Experienced buyers hold on to their expectations loosely in the early stages.

Experience teaches you to embrace a certain level of agnosticism early on in the process. You still need to be diligent about your acquisition strategy, but veterans know that their initial strategy will change and adjust as it is refined in the first steps of the process, usually to their benefit. They learn to hold their ideas and strategies with an open hand.

The more you can echo that approach, the less stress you’ll feel as those changes happen. In a first-time acquisition process, clients can often start out with an overly rigid idea of what they are looking for—that can start them off in the wrong frame of mind in all kinds of ways: too risk-averse, too risky, too idealistic, or too pessimistic. If you can start things out by hanging on to your expectations loosely, your M&A Advisors can work for you at their best.

2. Experience acquirers have built up a knowledge pool about the acquisition process across their organization.

Multiple people in your company will play roles of varying importance throughout the acquisition process. It’s the job of your M&A Advisors to keep all the intricate moving parts that make up a deal running smoothly—that’s as true on the fourth deal as it is on the first—but at one point or another, it will be all hands on deck for the members of your organization as well. Over time, as a company goes through successive rounds of the acquisition process, it gains an organic understanding of how the process unfolds. Everyone settles into the various responsibilities and pressure points that come along the timeline. They’ve been there before, and they know what it’s like.

You only build up that pool of shared knowledge and experience by going through it, but you can start laying the groundwork for building it well before you even begin your first acquisition.

I think the secret here is intentional, explicit dialogue right at the start with every staff member and stakeholder who will be involved in any way, at any stage of the process. Tell them that the first time is the hardest, but that there is an acquired skill set that will make it easier over time. Let them know you’ve hired good advisors who know what they’re doing. Put everyone in learning mode and tell them they are working together to build a pool of knowledge that will benefit the entire company. Charge your lieutenants to watch and internalize every new step of the process. The faster the pool is filled the better, so give your business a head start by learning all you can the first time through.

3. They learn to ask the small questions.

Experience teaches you (often in hindsight) that the smallest factors often make the largest impact on the outcome of a deal. Going through the acquisition process teaches you where to look for those small variables that can be easily missed, and what sort of questions need to be asked about them.

A candidate that looks perfect on paper might need further questioning on closer inspection: What about this little part of their production cycle that doesn’t quite mesh with yours? Or, look at this small side division of the seller’s business—what opportunities can we create out of that?

Direct experience will improve your instincts about the sort of questions that need to be asked, but my advice to newcomers to the process is to imitate the veterans on this anyway. That is to say, ask all the small questions. Ask a lot of questions. Ask the wrong questions. It’s how you’ll learn the right ones.

If you’ve got the right advisors, they’ll listen to those questions. If you’re the right kind of client, you’ll listen to their answers. In time, you’ll learn what questions bear the best fruit. In the meantime, ask them all.

I really enjoy walking a company through the steps of the acquisition process for the first time. There is good energy there that keeps things crackling, keeps everyone working.


The first time is the hardest, but great M&A Advisors are there to lend you all the experience you need until you’ve gained your own. Find your team at Stillwater here.

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Written by: Douglas Nix