“The best opportunities are the ones we’re pursuing and not the other way around.”
This comment in The Wall Street Journal from Smadar Levi, CFO of MyHeritage.com, is one I wholeheartedly agree with.
She is quoted in an article about the growing number of startups seeking to be acquired. With fewer financing options available to late-stage startups, many faced with the choice of closing shop or being acquired are choosing the latter.
For the buyers, a for-sale acquisition might seem like a dream come true. An opportunity has just landed in your lap! You don’t have to search for the company and there’s no need to convince the owners to sell. It seems like half the work is done for you already.
While a for-sale acquisition may sometimes be the right answer for your business, I’ve found that often it brings more trouble than solutions. The acquisitions you proactively seek out are more likely to match your strategic criteria than the opportunities that come to you.
The key word here is strategy, something many leaders do not consider when evaluating for-sale acquisitions. They allow themselves to simply react to the opportunities presented to them without considering the big picture. For those who do evaluate these opportunities against their acquisition strategy, many find for-sale deals do not match their criteria.
On the other hand, a proactive approach to M&A forces leaders to review their business strategy before considering acquisition. After all, before you can search for companies that meet your strategic need, you have to know what it is.
I am not suggesting that for-sale acquisitions can never be strategic or successful. But in my experience, you will have the most success by actively searching for companies that meet your strategic need. Acquisition is a significant endeavor, and, while many opportunities exist, the challenge lies in finding the best opportunity for your business. I believe a proactive, strategic approach to acquisition will give you the highest chances of success.