“It can be the best financial deal on the planet, but if it doesn’t fit our strategy…we’re not interested.”
This quote from Gary Norcross, President and CEO of Fidelity National Information Services, expresses a simple principle: In order to be successful, an acquisition must be strategic in nature.
One of the primary reasons acquisitions fail is because the buyer purchases whatever “good” deal that happens to come its way without giving a thorough consideration to the underlying strategy. Do not make this mistake. Always evaluate a deal with your company’s overall strategy in mind and do not let emotion cloud your judgement. Remember that organic and inorganic growth initiatives should complement one another. An acquisition is not a strategy; it’s a tool to help you execute your strategy.
Saying “no” to opportunities that are not aligned with your growth strategy is a paramount, but difficult skill to master. As business leaders, we want to say “yes” to everything, especially when it comes to new business opportunities and it is very tempting to pursue a deal even if it doesn’t really fit in with our strategy. Acquiring a company that fails to meet your strategy is a detriment, not a benefit and will pull you in the wrong direction, distracting you from executing your plan. For example, if you want to expand into the Canadian market, acquiring a company in Germany is not likely to help you reach this goal. You have limited time and resources, so focus on what is important to be most effective. Think about it this way: A “good” deal is not really a “good” deal if it does not meet your strategy.
To take a disciplined approach to acquisitions, start by focusing on what is most important to you. What is your growth strategy? And how will an acquisition help you accomplish this? Drilling down you can begin to develop your strategic rationale and compile specific acquisition criteria. Once you have established this foundation, you will be able to evaluate acquisition opportunities and determine when to say “yes” and when to say “no.”