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How to Plan a Corporate Strategic Acquisition

How to Plan a Corporate Strategic Acquisition

Two companies are about to become one, and the future holds plenty of excitement, challenges and chaos. You will find several priorities begging your attention after the acquisition. Therefore, it’s important to re-examine your strategic plan before you make your decision.

Whether your strategic plan brings success or not depends on how you will proceed after the acquisition. Is this going to be a partnership, or will you be the new head?

Your acquisition plan should first focus on building relationships with your targets that meet your pre-determined strategic criteria. One of the biggest reasons behind a strategic acquisition is that it leads to more successful outcomes. Hence, you need to hire professionals, such as Lloyds business brokers in Sydney, to assist you with the process.

Your acquisition plan template should include the strategy’s summary, a list of all your target companies, criteria the potential targets must meet, risk management, due diligence materials and materials.

Creating Your Acquisition Plan

One of the biggest mistakes business owners make is that they don’t create an acquisition plan. This is a helpful asset that allows you to design a roadmap, which reassures investors that there’s a rationale behind their decision.

You might find creating the acquisition plan easy because it is similar to a business plan that people make when starting out. Before starting with the planning, ask yourself: Does my plan sell an opportunity?

If the answer is no, rethink your plan. If it’s a yes, here’s what you need to do:

Create Your Executive Summary

An executive summary of your business is written in the beginning. However, if you look up any how-to guides online, you will read that they recommend writing the summary when you have written everything else.

This is a sound piece of advice. However, if you believe your proposal is compelling, create a rough draft right then. Your executive summary should be a page long and sell your business opportunity to its best. Investors will read this page first and then move on to the financial estimates.

Create a List of Your Target Markets

The second step in your acquisition plan is to write down what type of business you want to acquire and whether the price tag is worth it or not. If there are any weaknesses in the business, it doesn’t mean it shouldn’t be on the list. Talk about these weaknesses with your team and figure out solutions on how to eliminate them.

Set Parameters for the Target Markets

Your mission statement and executive summary will provide you with a clear view of all the parameters you should set for the target markets. For example, if the executive summary says that industries on the West Coast would be a great fit, there’s no reason to look at business outside this geography.

A few of the parameters you need to consider at this step include:

  • Target income and revenue
  • Maximum acquisition price
  • Target location(s)
  • Any “must-haves”
  • Target’s market segment

Marketing and Sales

How high are the sales of the target market you have chosen? Take a look at their pricing strategy for comparison and find out what marketing methods they use for selling their products and services. The purpose of this step is to find out the weak spots so that you can plan how much and where to invest.

Define Responsibilities

Once you have found out the strengths and weaknesses of the company and where more work is required, assign responsibilities. For example, you could hire a new manager who focuses on whipping the team leaders into shape, a consultant to find out what your next step should be, and an attorney to ensure no legal troubles.

Financial History

A company’s financial history tells a long tale of its wins and losses. Knowing past performance will allow you to determine whether they match your projections or not. If the latter turns out to be the case, you can hire professionals, such as Lloyds business brokers in Sydney, to balance the numbers.

Pre-Negotiation Strategy Meetings

Not everyone will be on-board with your plan. Hence, you should hold a meeting for pre-negotiations. A successful merger is only possible if both parties are happy.

Transition Plan

The last step is to go through the final document and make sure everyone knows who will be handling the company from now on. This step is not just about establishing ownership but reviewing the details and ensuring that the numbers are right.

After the supporting documents are exchanged, the acquisition takes place. Copies of licenses and tax returns are exchanged to transfer the owner and make the acquisition legal.

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by Dirk DeBie // Contributor to Businessing Magazine.

Opinions expressed by contributors are their own.