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Take on the competition - buying a competitor
by Sean Moriarty on 7 February 2012
With many companies finding organic growth tough at the moment, some are looking to grow through acquisition.
Although acquisitions have slowed during the recession, the current climate is very much in the favour of buyers. Pricing of companies is generally lower and difficulty in funding has eliminated some buyers from the market. If you’re a stable well funded business looking to acquire then now could be the time to do it.
Acquiring a competitor can be a great way to boost your company’s growth. Buying a competitor can be an efficient way to expand geographically, access a new customer base or bolt on additional products.
But how do you make sure your acquisition drives growth rather than cause you a major headache? Here’s some tips:
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1. Undertake rigorous financial and legal due diligence.
2. Make sure your commercial rationale is rock solid.
3. Draw up an integration plan before making the acquisition.
4. Allocate sufficient management time to the acquisition and the integration.
5. Work with experienced advisors.
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Aquiring and integrating a new company can put huge pressure on senior management. I’ve seen so often, how resource diverted into the acquisition can affect the performance of the acquiring company in the short term.
Understand why the business is being sold and what your rationale is for buying it. Know what you are taking on and why.
Due diligence ensures there are no nasty surprises. Get access to rigorous up to date financial information. Look at the people involved, the management team.
Put the hard work up front, to avoid the pain later. It can be dauting but buying a competitor can accelerate growth and take your company to the next level.
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