Mergers and acquisitions: Five things you need before you take the plunge - Monterro.com

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Mergers and acquisitions: Five things you need before you take the plunge

Add-on acquisitions can be really exciting because, if used right, they can massively accelerate your business growth. 

In fact, as we explore in detail in our Mergers and Acquisitions eBook, add-on acquisitions can help you:

  • Build a stronger market position and increase company size 
  • Expand into new geographies
  • Access new and interesting customer bases 
  • Strengthen your product offer  

But it’s important not to lose your head, because there are a number of things you need to have in place before you make an acquisition

I’ve pulled together some insights on the matter and distilled it into five key considerations. 

This is a valuable 4-minute read but if you only have one minute, you can jump to the key takeaways.

Let’s dive in. 

You need resources

There’s no two ways about it, acquisitions need resources. There’s a hefty due diligence process required which will likely need at least five people from the acquiring company to manage. If this sounds unfeasible, it’s a sign you’re not ready for an add-on acquisition. We recommend that an organisation should have at least 20 people and a turnover of €2.5m-3m to be able to sufficiently “look after” an acquisition. 

You need a goal

Know the why behind the acquisition. As we explored above, add-on acquisitions can help your business grow in a number of ways, so identify which one best fits your goal. For example, if internationalisation is your top priority, that will affect how you approach the acquisitions process. 

Discuss the goal at length with your leadership team and get buy-in on your business direction.  This will become the cornerstone of your acquisition strategy. 

You need a plan

With your M&A goal established, you need to think about how you’ll get there and the resources you’ll need to make it a reality. Be realistic with timelines and ensure your financial planning is meticulous. 

Pro tip:

Interrogate how this acquisition fits into your overarching business strategy. Where do you want to be in the next 3-5 years? Make sure you’ve defined which parts of your overarching strategy will be accomplished organically and which would be better served with add-on acquisitions. 

 

You need to know your target

Establish a list of attributes a business needs to have to be a great acquisition opportunity for you. Things to consider here include: the size of the business, the type of service/product they offer, the geographies they operate in, the strength of their customer base, and where they sit in their market. 

Most importantly, what is their company culture? As we explore in the full eBook, culture is the biggest maker or breaker of add-on acquisitions. Keep this at the forefront of your thinking when it comes to identifying opportunities. 

You need to do your research

Don’t make acquisitions in markets you know nothing about. Be proactive, using everything from Google to tradeshows and networking events, get to know the space you want to enter. Work out who the big players and new challengers are, the hottest trends, the level of competition, and the key market differentiators. 

And if you find a business that seems to fit the bill, get to know them. When you make an acquisition, it’ll involve a lot of working together so take time to make sure you’re a good match. 

And that’s it.

Here are my key takeaways… 

  • Assess whether you’re ready:  Does your organisation have less than 20 people and a turnover of less than €2.5m-3m? It might be time for more organic growth first.
  • Set a goal: Know why you are making an acquisition. 
  • Make a plan: Once you have your goal, plan how to get there, and what you need to make it a reality. 
  • Get specific: Draw up a detailed picture of what a great acquisition opportunity looks like for your business. 
  • Do your homework: Be proactive. Fully investigate the market you want to enter and the business you’re thinking of acquiring.

 

If you want the full story on add-on acquisitions, check out our Mergers and Acquisitions eBook

It’s full of top tips and lessons our experts learned (sometimes the hard way). These include: what to put in an acquisition strategy document, the best ways to set expectations and avoid nasty surprises, and the perils of acquiring a competitor.