Identifying Acquisition Targets

Seeking out the right businesses

To benefit from all of the advantages of a merger or acquisition deal it is important you carefully choose the right company. Making a deal with a company that has different strengths to yours may be beneficial as it will increase the overall strengths of the company. They still however need to support the original assets of your business so that you can combine your resources and be successful in your market.

Personal M & A advisors

A personal advisor in your sector is often regarded as the most effective way of finding an appropriate target. They have vast experience and know how when it comes to handling deals between different companies. After meeting your advisor you would typically hand over a shortlist of about ten companies, after which the advisor would take it from there. If you make a successful transaction with a desired company you will be obliged to pay the majority of that advisor’s fee.

Research and making a shortlist

Another recommended method of identifying the most appropriate targets is to make a shortlist. Firstly you should draw up ideas of the sort of company you want along with reviewing information on the market, various companies and also products and services you would like to possess. Once you have developed the characteristics of your target company you can then assess the firms you already buy or sell to. Acquisitions and mergers are easier to establish with companies in an existing relationship. With details of your target company to find out potential deals via corporate finance firms or investment banks.

Registering your interest

Once you have identified a suitable target through one way or another, you have to register your interest with the owners or management of the business. You must express why you wish to merge or acquire the company, how you will finance the deal and what your future plans and goals are for the business. For an acquisition you will need to find out if they plan to sell and why. You will also need to consider whether the owner will want to be involved in any future plans of the business. With a merger it is crucial to find out information on the owners to see what they are like and if you can envisage a successful relationship in the future. If you foresee any problems or differences in personality you should keep the interests of the business at heart as success is determined in the long term.

In summary, when identifying targets for an acquisition or merger it is important to consider all the factors that may affect your decision or affect the company’s long term progress. We also strongly recommend that you seek the assistance of a professional advisor during the process.

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