The more reasons you have to buy a company, the less you should want it. This may sound strange. After all, isn’t it best to be efficient and kill two (or more) birds with one stone? Since acquisitions are rather expensive, shouldn’t you get your money’s worth? Endless Possibilities…Zero Results It can be tempting to think …
Tag: acquisition strategy
Is Everyone on the Same Page? Gaining Clarity on Your Company’s Vision for Growth
“We have a strong vision and a clear plan for growing the company in the future,” Sarah, the CEO, told me with complete confidence during a recent strategy session. Her CFO disagreed: “We have no vision.” Various members of her executive team shared similar sentiments privately with my team and me. Many expressed anxiety; they …
How Can You Manage Mergers and Acquisitions Risk?
Acquisitions are one of the fastest ways to grow, but they do come with their own set of risks. Industry numbers show that about 70% of acquisitions fail, so executives are highly motivated to mitigate their risks when purchasing a company. This can be done in a number of ways. Usually we think about hiring …
Why Price Is the Last Thing to Talk about When Buying a Company
Time your negotiations by understanding owner psychology. Everyone wants to talk about price in mergers and acquisitions. It’s often the number one focus of buyers and sellers…but for opposite reasons. Both are likely to say they are looking for a “good deal,” but this can have a completely different meaning depending on the perspective. Buyers …
Strategy, Not Equity, Should Drive Integration
When it comes to integration, people often think equity ownership should determine their approach. If they own 100% of the business, they should change all the target’s practices to their own. In a strategic alliance where neither side can force the other side to do anything, they might not integrate any of the practices. But …
Strategic Acquirers at an Advantage in Today’s Market
If you’re strategic acquirer, 2015 will be a good year for you. In 2014 we started to see companies, especially strategic acquirers be more aggressive about M&A. This likely will continue and even accelerate in 2015, especially since many still have a record amount of cash on their balance sheets. While we’ve had a pretty …
5 Tips for Meeting with Owners about Acquisitions
“I felt so vulnerable. I didn’t know what to do or what to talk about,” Dan told me. As the CEO of a food manufacturer who was pursuing acquisitions, he had a first meeting with an owner of a packaging facility before he engaged Capstone. When we met he expressed feelings of uncertainty and how …
Approaching an Owner for a Possible Acquisition? Don’t Write, Call.
How do you begin your courtship of a not-for-sale company? Sending a letter is fairly common practice for contacting owners, but it’s not the most effective way to communicate. A letter will not attract the owner’s attention and likely will go into the trash without being read. There’s a better way to stand out from the …
Why Did Buffett Buy Duracell? Finding Growth in Mature Markets
At first glance you may ask, “Why in the world would Warren Buffett buy Duracell?” One explanation is financial. Through a bit of fiscal engineering Berkshire Hathaway is able to avoid triggering significant taxes. The Duracell transaction, is essentially a merger through a stock swap. Berkshire will give P&G $4.7 billion of the shares it …
If 70% of Acquisitions Fail, Why Even Try?
With a 70% failure rate for acquisitions, it seems like the odds are against you from the beginning. Before you get scared off, however, let’s take a closer look at what that 70% means. The 70% failure rate is mainly based on large, publicly traded transactions because large transactions must be reported to the SEC, …
