Improving the Odds of Success
With Your Acquisition
In recent years, acquisitions have become a way of life for
most companies. However, it was not always that way. The first of
a three-part series exploring the acquisition process.
BY DAN WATSON
CONTRIBUTING EDITOR
Just a few decades ago acquisitions were at best a nov- elty, not a serious enhancement option for strategic undertakings. As a result, very few companies went
to the trouble to “do it better” or to “institutionalize learn-
ing’s” gleamed from such activities. At most, a company
might plan to make one or two very small, non-strategic
acquisitions in its future. Integration was simple: “We
bought you, and you now belong to us.”
The acquisition landscape has changed a great deal in
recent times. In the 21st century acquisitions are an accept-
able part of strategic planning. In fact, a number of compa-
nies owe their entire existence to acquisitions. This is espe-
cially true with financial buyers such as holding companies.
Unfortunately, the ultimate success of most acquisitions
isn’t sparkling. With less than 30% of acquisitions resulting
in real success it’s difficult to understand why there is so
much activity in this area.
This article will be the first of three-part series that will
attempt to provide the reader with some best practice
observations that may be useful in improving the eventual
outcome of an acquisition.
Based on the experience that my colleagues and I have
had with numerous past acquisitions we feel that there are
three distinct parts of the merger and acquisition (M&A)
process that deserve significant attention by the buyer.
Some of these items listed could involve the seller to the
extent that legal and other matters allow.
1) Initial concept and planning. The initial concept and
planning stage involves identifying your perceived needs to
bring about ultimate success with your strategic direction
versus what you have in-house as actual core competencies.
This includes the evaluation of options to fill in the gaps;
development of criteria to move forward; establishing a short
list of potential candidates/solutions; and the establishment
and preparation of various internal/external teams through
training. Essentially, knowing what you need, possible
options to satisfy that need (i.e., acquisition, alliance, license,
etc.), understanding what your potential solutions might
look like (what you will and will not accept as part of your
chosen solution), determining who best fits your requirements and making certain that you have adequate resources
that are prepared/trained to carry out your objective.
2) Post letter of intent activities. This stage involves continuing negotiations, commencement of formal Phase I and
if needed, Phase II due diligence, integration plan preparation, day one plan preparation, communications plan formation, and purchase agreement formation.
3) Post purchase agreement signing activities. This includes
“day one” communications with all stakeholders in an acceptable fashion; establishing integration/transition teams comprised of members from both sides; commencing the finalization of the integration plan; performing audits of the entire
process; and facilitating institutional learnings.
A LITTLE HISTORY
As with most subjects, it might prove useful to look at a bit
of history involving M&A activities. In other words, how did
we get to where we are today?
