Strategic Acquisitions

1. Defining Your Aims

Acquisitions are more risky than organic growth.

Be clear about what you need, and what you expect an acquisition to do for you, before investigating possible takeovers.

1.1 What are your strengths? Can you complement them? Can you afford to risk diluting them?

• How good are your employees?
• How good are your products, your market position and your market share?
• Do you have financial muscle? For example, money in the bank, or shares in your own company which can be sold.
• Do you have advantages in technology or production processes?

1.2 What are your weaknesses, and how could you rectify them?

• Is your market position vulnerable?
• Are your finances overstretched? Are your overheads taking too high a proportion of your income?
• Do you have any management weaknesses?

1.3 Analyse your opportunities, and how you might be able to take advantage of them.

• Do you have a solid market position, good products or a reputation that could be more fully exploited?
• Do you have a capable management team, with experience in turning round underperforming companies?
• Do you have underutilised resources? For example, money, plant, premises or your distribution network.
• Are your competitors vulnerable?

1.4 Assess the threats to your current position.

How can you neutralise them?

• Are you facing new and aggressive competitors?
• Is your market static or declining?
• Are you over-dependent in a critical area - for example, on a particular employee or customer?
• Are you subject to cost pressures that you cannot pass on to your customers?