The Secret to Finding the Right Acquisition Targets

“We would like to do an acquisition, but there are just no good companies to buy.”

I’ve heard this sentiment repeatedly throughout the years from both owners of small, family businesses and executives of Fortune 500 firms alike. Identifying the right company to acquire is key to a successful transaction and the process takes significant resources. No matter the industry or company size, finding appropriate acquisition targets seems to be a common struggle for all business leaders. I have found that many of the leaders that find themselves in this position have one thing in common: they are only looking at for-sale deals. The secret to finding the right acquisition targets is to consider not-for-sale deals.

While a list of for-sale deals can be a source of targets, relying on this list alone can be problematic because it vastly limits the number of companies you consider. Most default to for-sale lists because they think companies that are not for sale will never sell, but from experience, I can tell you that’s not the case. A “not-for-sale” company is simply a company that is not advertising it is for sale or actively seeking a new owner; however, with the right package and a compelling strategic rationale, an owner may be persuaded to sell.

Now that you’ve broadened your search to include not-for-sale companies, where do you begin? Rather than beginning by looking at existing companies, we recommend you start with your acquisition strategy in mind and paint a picture of what your ideal acquisition target would look like. Does it operate in a growing market? How large is the company? Where is it located? What capabilities does it have? What are the managers like? The culture?

Once you develop a profile of your ideal acquisition, you can build out criteria and use them to evaluate and prioritize acquisition prospects. When you begin with strategy to build your pipeline of candidates and include not-for-sale companies, you will greatly increase your likelihood for success and your chances of identifying high quality companies.

Learn more in our webinar Building a Robust Pipeline of Acquisition Prospects.

Date: Thursday, July 26, 2018

Time: 1:00 PM EDT

CPE Credit available

Photo credit: Amtec Photos via Flickr CC BY-SA 2.0