Many start up companies hope to eventually get acquired but don’t have a clear acquisition strategy or plan on how to get there. In order to create an effective acquisition strategy as a small business, there are several aspect of their business that must be carefully planned out. While transparency is important, the particulars concerning the companies finance and legal aspects play a vital role in the success of the acquisition. In addition, there are organizational concerns, communication tasks and stakeholder assessments required. Let’s take a look at developing a good acquisition strategy…
1. Be Clear With Yourself On Goals And Motivations Before Developing a Acquisition Strategy
The first things you want to consider when positioning your company for an acquisition is your reasoning for selling your business and how you want that goal to be executed. Ensure that you understand the impact of the acquisition, and prepare the company for a smooth transition into that direction. Any company looking to acquire your start-up is going to be interested in understanding the vision you have and the potential you see in your respective industry..
If your vision is not visible to others, chances are you will have a difficult time attracting a complimentary investor or buyer. On the other hand, a clear vision could make the difference between thousands and millions of dollars. Elastica’s recent acquisition by Blue Coat is a perfect example of this.
2. Get Your Business Affairs In Order
The complex and lengthy process of the acquisition will require a full and thorough transparency of the inner workings of your business. Financial statements and other discovery documents will be vital as you make appeals to potential buyers and establish your company’s’ value. Do your due diligence by organizing all pertinent documents, ensure all taxes and licenses are current, and satisfy any outstanding issues that may be viewed as an encumbrance or threat to your company.
3. Get The Experts Involved
As an entrepreneur, your expertise is in providing your service or selling your product. Just like you seek the best personal doctor or the best hairstylist, establish a team of the best investment bankers, tax attorneys and advisers who are experts in their fields. An acquiring company will be impressed by the quality of reports that will be delivered, especially since it will be prepared by an outside expert, as it gives authority to the testaments given.
A business that is being micro-managed and macro-managed by the same person does not give the impression of a serious, established and profitable business worthy of being purchased, but rather more of an entrepreneurial endeavor that needs additional time to flourish before it is sustainable. Besides, if you allow the experts to handle those crucial tasks, that leaves more time for you to confidently focus on the other aspects of the acquisition.
4. Open The Lines Of Communication With Your Management Team
Create an open environment where your talented employees remain involved and informed. Prepare the team for the transition and encourage them to take a personal stake in the transition. By remaining cultivated with the best and brightest on your team, you ensure that you will retain their loyalty and dedication, which make the strength of the business as a unit more appealing.
5. Make Sure Your Key Stakeholders Are Aligned To Avoid Last Minute Crises
Make sure every member of the board and all key stakeholders are on board for the sale. Try to predict any conflicts that might arise at the least opportune time. Large corporations are easily scared away from strife within a company that visibly poses a threat to the companies’ potential success. They’ve seen businesses like Hewlett-Packard lose millions as a result of bad acquisitions, so naturally corporations want to proceed with caution. Any last minute disagreements can stall the acquisition, or even permanently dismantle the agreement all together.
6. Re-Establish Significant Partnerships and Clients
One of the most important reassurances that you can offer is that the current customer base is established, strong and loyal. Part of the process of nurturing that loyalty is to customers them selectively informed. You want to avoid scaring them off towards your competition after the acquisition. Your investors also may want to engage with the customer base to evaluate their level of support and loyalty. This critical assessment serves as a vital reference for investors and buyers when predicting future growth potential of a business in the aftermath of the acquisition.
7. Understand Your Company Narrative
When conveying your journey and passion to a buyer, your narrative will be more effective with it is compelling and credible. Every aspect of your company will be in the spotlight, and it is important that your narrative is inspiring, confident and convincing. The interested parties are not the only ones who need to feel your passion. The stake holders, board member, employees and customers all alike must be in sync based on your conveyance, Without that harmony, you will find it difficult to convince them to sign on the bottom line.
Once you have all of your business affairs in order for your business acquisition will become probable, but almost certain. You will attract the right type of company who will be able to envision your dream and implement strategies that will elevate the value and positioning of your business.
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