If your company has decided to work toward opening up new markets or opening up new services or acquiring another company, you need to get as much value as possible in these endeavors. To do this, you’ll need a clear acquisition strategy. Ideally, it should be part of your broader corporate strategy, and it should also be broken down into several phases. Having an acquisition strategy will ensure that you’re always on a clear path, and in this article, we’ll highlight the 7 main steps you need to take to form a quality acquisition strategy.
Acquisition Mission Statement
Forming such a statement will serve as your point of departure any time you lose the true meaning of your goals. They will help you get back on track, and keep searching for what you’re looking for. When you know exactly what you want, the search is much easier.
Set parameters for the target company
Your mission statement should set parameters for your future target company. For example, if you say in the document that you want to find a company with a specific location, there is no point in looking elsewhere – even if the offer seems tempting. Traditionally, the parameters for targeting a company include:
- The maximum price you are willing to pay to acquire the company
- Targeted income
- Target location
- Target market segment
- Your other individual must have
Set a timeline
Decide on a timeline by which time you want to be done with the acquisition. Of course, a timeline of 2-3 months is unrealistic, it is very important to evaluate the whole picture realistically. If you are planning on acquiring a local company you may need a year, and if you are planning on acquiring overseas, then it will come out to 2-3 years at least. Setting a timeline is very important because it allows the company to set its budget for the next one or two years. It is advisable to break down the entire term into smaller time periods, say 3 months, to gradually reach your goal, for example in the first three months you have to find a target company, another three to integrate after the merger, etc.
Once the plan has been formed, you need to start taking action. You should assign tasks and assign responsibility for the acquisition to one of the company’s directors, or a new employee in mergers and acquisitions. They, in turn, should provide you with feedback at a time you set – maybe every week or every month. They should update you on their progress, suitable targets, and market conditions.
As a manager, you can provide them with additional tools to facilitate their task, such as a virtual data room.
Create a targeted search
The search will depend on who has been assigned the responsibility. If you decide to hire an outside specialist for the job, he or she has the best chance of finding the right target for you as quickly as possible because he or she has well-developed connections.
Determine your outreach strategy
Once you’ve found the right target for you, it’s important to make the right contact with them. Sending your offer via email to the company’s customer service team will definitely be inappropriate.
In order for your outreach strategy to succeed you need to:
- Communicate through third parties
- Send a registered letter of interest to the appropriate person in the target company
- Directly contact decision-makers
Strategy meetings before the negotiations
Properly prepare before you begin negotiations with the target company. Discuss with your team the parameters of the deal, how it will be structured, and how the financing will come in.