5 key learnings from our acquisition…
Not so long ago, we acquired another advisory firm, taking on some 30 new client families. And while there were no new staff members to bring across, the process gave us first-hand experience of what makes for a smooth business acquisition.
Here’s what we believe are the five most important steps to take, when looking to acquire another business:
1 - Have a clear acquisition strategy
Having a clear strategy helps guide your decision-making process and ensures you focus on acquiring businesses that align with your objectives. In our situation, we were first approached with an opportunity before we had considered defining our acquisition strategy, but this prompted us to consider the type of businesses we wanted to target, our investment criteria, and our long-term goals. There’s no doubt however that having this in place ahead of time will make a huge difference.
2 - Get professional help
Unless you are already an expert in mergers and acquisitions, we would recommend engaging practised professionals - lawyers, accountants, and business valuation experts. They can provide invaluable guidance, help with negotiations, and make sure all the legal and financial aspects are properly addressed.
3 - Do your due diligence
Comprehensive due diligence is critical before acquiring a business. You don’t want any nasty surprises when it’s too late to back out, so do as much research as possible beforehand. Review all accounts, providers, products and clients and gain as much information as you can upfront as it will always be more work than anticipated.
A mergers expert can guide this. They will review financial statements, evaluate assets and liabilities, examine contracts, analyse market conditions, and help you understand the business' overall performance and potential.
4 - Assess cultural fit and integration
This is something that can so easily get overlooked. But evaluating the cultural compatibility between the acquiring and target companies is crucial. A successful acquisition involves integrating people (certainly clients if not also employees), processes, and cultures smoothly. This means you will need to really look at just how well the two organisations align in terms of values, management styles, and employee dynamics to pre-empt and prepare for any potential challenges during the integration process.
5 - Develop a detailed integration plan
A well-structured integration plan is essential for a successful acquisition. The key is to identify the significant integration milestones, establish clear communication channels, and define responsibilities and timelines. It is also well worth looking for opportunities to merge systems and streamline operations, while also identifying which employees (if retaining) will be central to facilitating a smooth transition.
While each business acquisition will be unique, and it's important to adapt these recommendations to your specific situation. Having a plan, seeking professional advice and conducting thorough research will significantly increase your chances of a successful acquisition.