Does this sound familiar? You want to grow through acquisitions, but there are no good companies to acquire. While it may seem like there are absolutely zero acquisition prospects, usually that is not the case.

Many companies struggle to find acquisition prospects because they are focusing on only on industry partners, suppliers, or competitors they already have a relationship with. We call these companies the “usual suspects.” There’s nothing wrong with looking at the “usual suspects” for acquisition opportunities, but if you find you are hearing the same company names over and over again without getting any results, it may be time to try a new approach.

Here are four more ways to find quality acquisition prospects in addition the “usual suspects”:

  1. Market Research – In researching the market you will naturally uncover a few potential acquisition prospects. You will also have the advantage of gaining a deeper understanding of the market which will help you select the best companies to acquire, evaluate potential acquisition candidates, and negotiate with owners.
  2. Trade Shows / Associations – Both are an excellent source for finding many companies in your desired industry in a short amount of time. Walk the floor of a trade show and you’ll see dozens of companies all in one location and many trade associations also member companies listed on their website.
  3. Internal Input – Use the resources you already have. Your sales team is filled with folks who have their ear to the ground and are up-to-date on key players and new developments in the industry.
  4. For-sale Companies – Looking at for-sale companies is never a bad place to start your search. Just make sure you don’t limit yourself by only considering these opportunities. Including not-for-sale companies in your search will increase your chances for a successful acquisition. Remember, every company is for sale, for the right equation.

For more tips on finding companies to acquire join our webinar Building a Robust Pipeline of Acquisition Prospects on March 23.

After this webinar you will be able to:

  • Approach the search for the right acquisition prospect systematically
  • Understand effective research methods for identifying prospects
  • Develop criteria for your ideal acquisition prospect
  • Use tools for objective decision-making during the acquisition process

Building a Robust Pipeline of Acquisition Prospects

Date: Thursday, March 23, 2017

Time: 1:00 PM – 2:00 PM EST

CPE credit is available.

Photo Credit: patchattack via Flickr cc

“The best opportunities are the ones we’re pursuing and not the other way around.”

This comment in The Wall Street Journal from Smadar Levi, CFO of MyHeritage.com, is one I wholeheartedly agree with.

She is quoted in an article about the growing number of startups seeking to be acquired. With fewer financing options available to late-stage startups, many faced with the choice of closing shop or being acquired are choosing the latter.

For the buyers, a for-sale acquisition might seem like a dream come true. An opportunity has just landed in your lap! You don’t have to search for the company and there’s no need to convince the owners to sell. It seems like half the work is done for you already.

While a for-sale acquisition may sometimes be the right answer for your business, I’ve found that often it brings more trouble than solutions. The acquisitions you proactively seek out are more likely to match your strategic criteria than the opportunities that come to you.

The key word here is strategy, something many leaders do not consider when evaluating for-sale acquisitions.  They allow themselves to simply react to the opportunities presented to them without considering the big picture. For those who do evaluate these opportunities against their acquisition strategy, many find for-sale deals do not match their criteria.

On the other hand, a proactive approach to M&A forces leaders to review their business strategy before considering acquisition. After all, before you can search for companies that meet your strategic need, you have to know what it is.

I am not suggesting that for-sale acquisitions can never be strategic or successful. But in my experience, you will have the most success by actively searching for companies that meet your strategic need.  Acquisition is a significant endeavor, and, while many opportunities exist, the challenge lies in finding the best opportunity for your business. I believe a proactive, strategic approach to acquisition will give you the highest chances of success.

M&A can be a powerful tool for transforming your business, but it’s important to find the right partner who is aligned with your strategy  in order to accomplish your goals. For sellers, oftentimes acquisition means saying goodbye to a business you’ve built from the ground up. You don’t want to sell your life’s work to just anyone.

So how can you make sure you find the right buyer who shares your vision for the future? I’ve offered my top ten tips for selling your business in the Examiner. Read the full article: “An Expert’s Top 10 Tips for Getting Acquired.”

Many leaders take a reactive rather than proactive approach when it comes to M&A. They often realize that their organic growth is stagnant and they’ve got some money they can leverage, so they decide to make an acquisition. What do they do? They go find for-sale companies or respond to those that have found them. While this reactive approach may quickly yield “opportunities,” they may not be the right ones for your company’s strategy.

It’s best to first figure out what you want to achieve and what you want your company to look like 10 years from now. What capabilities would you like to add? It could be location, technology, brand recognition, etc. After you’ve determined this, then go find the right companies – whether they are for sale or not for sale – to help you achieve your vision. It’s better to spend time finding a great strategic fit than to hit the “easy” button and rush into a for-sale acquisition. Acquiring the right company that matches your overall strategy is worth the wait.

Photo Credit: striatic via Compfight cc

It’s that time of year again. The holiday season is a great occasion to spend time with family, celebrate with friends, give to charity, drink hot cocoa – and of course buy presents.  Beginning with Black Friday, holiday sales are out in full swing with retailers trying to entice consumers with the lowest prices on gifts ranging from toys to clothes to electronics.

Fixating on price is not only limited to busy holiday shoppers: For acquisitions, executives too often focus on price. Most people make the mistake of thinking that is what an acquisition is all about, but the reality is it’s more about buying the right company.

Buyers should understand there are many different aspects surrounding a deal, many of which are not financial. Sellers may find value in other incentives such as healthcare for their family or involvement in their local charity, or even in intangible assets such as understanding and trusting the buyer’s strategic vision for the future.

The fact is, you can overpay for the right company and recover. Sure, it may take you a bit longer to recoup that extra $500,000 you spent, but you will still be successful. On the other hand, you can underpay for the wrong company and never recover. Buying the wrong company brings multiple hazards.

You may save money by getting it “on sale,” but the wrong acquisition could take you in a fruitless direction, ruin your reputation in the marketplace, or compromise your technology. At that point, you could have bought it for free and still lost! It’s like buying a shirt in the wrong size simply because it’s on sale. Sure, it was cheap, but you’ll never wear it because it doesn’t fit. You would have been better not buying it in the first place.