What Are You Looking For?

The whole act of buying a business hinges on finding the right one to buy.

The company you acquire must align with your company’s mission, contribute to your strategy for the future, and tick other boxes unique to your needs and situation.

In the early days of the three-step formal acquisition process—the preparatory phase, the market outreach phase, and the deal phase—a lot of our energy as M&A Advisors goes into locating and narrowing down a catalog of sensible prospects from the wider market. I will offer more detailed insight into the locating and refining process in later posts, but I want to bring it up here at the outset to suggest some work you can do before the process begins.

You know your business best and may already have an idea of the type of business you are looking to buy—some sense of a missing piece that needs filling, or an expansion opportunity waiting to be seized.

A lot of the early discussions you have with your team at Stillwater Capital, once we start our work together, will help us get to know what you already know. In those discussions, there is a fundamental question:

What are you looking for?

Clients often start with a general answer to that question. Our job together, M&A Advisors and Client, is to use every tool of discovery to turn the general answer into specifics and use those specifics to find the ideal. However, the more thought you have put into the matter before we begin our work together, the better equipped we will be to search efficiently and effectively on your behalf.

Suggested areas to think through before our work begins:

  1. Product/Service Offering
  2. What will the company that you acquire make or do for you? There are rare cases where this might be an unknown at the outset, but in general, this is a basic you should know from the start.

  3. Size
  4. How big a company are you buying? More importantly, how big a company can your existing company handle? Answering this well requires real knowledge (and honesty) about your company’s current bench strength and capability to effectively onboard an acquisition.

  5. Geography
  6. Where is it? If this acquisition is about penetrating a new regional or international market, you may already have a specific answer to this question. If not, it is important to consider whether it is feasible to operate in-sync, from a distance.

  7. Management
  8. When you take over, what is your vision for the management and leadership structure of the acquired business? Will leaders stay or go? The specifics of this are hashed out in later negotiations, but knowing your goals at the outset will help define your search parameters and set you up for successful integration after the deal closes.

  9. Risk and Profitability
  10. All strategic moves in the corporate sphere come with risk attached—how much can you handle in a new acquisition? What about profitability – how much time and space will the new company be given to find its legs and operate at a profit? These answers will set important limits on search parameters as your advisors investigate the market, providing a better opportunity to find the right match from the list of candidates we shortlist for you.

    The formal first step in any acquisition process involves a deep dive into these questions with your advisors. Serious M&A Advisors work with a much longer list of critical variables than the ones given here, but they all begin with that simple question—What Are You Looking For?

Prepare what you can, in advance, and it will help make the acquisition process frictionless.

In most cases, the answers you come to us with will be incomplete at the start and will most certainly change as we progress. That is a good thing. Your answers are excellent building materials for your M&A Advisors to work with. Part of the acquisition process involves your team starting with a raw, incomplete vision, and meticulously fine-tuning, filling in the blanks, and sharpening focus until—behold!—a clear, unmistakable image of your ideal target has been defined.

At Stillwater Capital, dedication to perfecting that picture is a core value. A great acquisition depends on it. Diligent preparation at the outset of the process yields better results at the end. I’ve seen this proven in real-time, over and over again.

When you’re ready to begin, contact us here.

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Written by: Douglas Nix