Prepare to Acquire or be Acquired

It used to be you could start up a business and merrily work away until you were ready to sell out and retire. Things change so quickly now that this often just isn’t the case. New competitors arise, technology changes, the economy frequently moves up and down…you name it and it’s bound to happen. The Bureau of Labor Statistics in the United States has released information that shows just over fifty percent of new businesses survive five years and around one-third survive ten years.

So how is this relevant to the subject of acquisition? The pace of change is so quick these days that growth often comes from acquiring new or similar businesses. The changes are very likely, if you are one of the survivors, that you will acquire someone or be acquired. Depending on your exit strategy, that might be a good thing or a bad thing. Either way, there are some standard principles you should follow in order to make sure the acquisition succeeds.

First, you need to have the right people. If you’re going to acquire someone, your people need to be able to handle the needs of a more complex organization. If you’re going to be acquired, the purchaser will normally be very interested in the quality and commitment of your staff.

Secondly, you need the right systems in place, both processes and software. The arguments apply as for your staff. A properly running organization with modern systems will be much more capable. Purchasers will want to make sure they’re not acquiring a firm working in the Stone Age.

And, finally, sit down with your key advisors and stakeholders and really determine both what your short and long-term objectives are and how you see yourself growing or exiting. You need to be prepared for both eventualities. Talk to your accountant, your lawyer, your spouse, business partners, etc. Be prepared! The opportunity will come and your direction needs to be crystal clear in order to properly evaluate the situation.