Acquisitions – Each week I will identify a different theme of the week and provide you with content, some original and some from external sources, around that theme.
This week’s theme is “acquisitions.” There are all kinds of approaches to acquisitions and reasons for doing them, including:
- Natural expansion of or complement to existing business
- To start a new business of your own
- To get your hands on certain technology, products, capability, markets, customers, etc.
- To snuff out the competition
- Because you see growth opportunity
A Word On This Week’s Theme
I’ve been involved in a number of acquisitions on both sides (the side doing the acquiring and the side doing the selling). I’ve seen them done in ways that build upon the value of the acquired business and I’ve seen them done in ways that destroy the value.
I’ve never understood the latter, believing that, unless you strictly bought the business to kill it as a competitor, you bought it because it had some perceived value…so why would you purposefully destroy it? Sometimes it is nothing more than hubris that gets in the way.
“We want the best of both worlds, but, we are the ones acquiring you so in this case the ‘best way’ is our way.”
In Business is ART I somewhat jokingly say that my next book will be entitled Acquisitions and the Assholes Involved (hint: one of them might be you). But there is a lot of truth in the sentiment. As the acquiring party, you want to be careful not to be the one to destroy the value in what it is you are acquiring.
On the flip side, if you are the one being acquired, you have to be willing to accept that things are about to change. If you were “the boss” you won’t be any more. Seek to understand the changes but don’t be too aggressive about changing the ways of the acquiring party nor about stubbornly trying to hold on to your own ways.
It’s a new reality after an acquisition so before the deal is struck, and shorty thereafter, ask yourself, “Can I live with it?”
This Week’s Links
Successful acquisitions take in to consideration several things, such as:
- Why am I doing it?
- What do I want things to look like after?
- How do I properly valuate the acquisition?
- Who is critical during and after the acquisition?
- How do I maintain the customer base after the acquisition?
Included in the following list are several links to articles and videos that I found interesting on the subject of acquisitions, many of which address the aforementioned considerations of an acquisition. I love the quote from Rick Milenthal in the article from Smart Business – “Don’t let opportunity trump strategy.”
There are many more things to consider, but the bottom line is you have to have a vision and a plan for doing an acquisition successfully. Without them, you will just be throwing money away.
- Entrepreneur – 3 Ways to Get Big Spenders to Acquire Your Startup –https://www.entrepreneur.com/article/250713
- Entrepreneur – How to Acquire a Small Business (and Keep Employees Happy) – https://www.entrepreneur.com/article/231583
- Inc. – How to Evaluate the Environmental Sustainability of a Potential Business Acquisition – http://www.inc.com/replacemeplease1455899624.html
- Smart Business – Rick Milenthal’s dealmaking philosophy focuses beyond the financials – http://www.sbnonline.com/article/rick-milenthals-dealmaking-philosophy-focuses-beyond-financials/?all=1
- Modern Healthcare – Healthcare merger and acquisition activity likely to stay strong in 2016 – http://www.modernhealthcare.com/article/20160101/MAGAZINE/301029931
- McKinsey & Company – Understanding the strategic value of IT in M&A – http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/understanding-the-strategic-value-of-it-in-m-and-38a
- TED – Why the best hire might not have the perfect resume
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