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

Finding a list of companies to acquire is exciting! You start thinking about all the possibilities and how the deal will grow your business exponentially. But before you move forward with any of these candidates, take a step back and make sure you are looking at companies in the right markets.

What are the “right markets?” Markets that have a healthy, stable demand and are growing. After all the primary driver for acquisitions is to help your company grow. Without researching markets first, you risk acquiring a company in a stagnant or declining market. Although the company may have strong financials today, if there’s no demand in the marketplace, your acquisition won’t deliver the expected returns on growth in the future. Without first selecting a market, you have reason to beware of even the most tempting buying opportunities.

Finding the right market begins by defining the market using geography, verticals or another relevant factor, and by developing market criteria to aid in your decision-making. Your research will begin with a broad sweep and become progressively narrower as you learn more about the market.  Your market criteria will help you objectively evaluate and compare the markets against your strategic rationale for acquisition.

Researching markets first not only helps you avoid acquiring a bad company, it helps you identify the best companies to buy. By conducting market research, you will gain a better understanding of the market, which will help you evaluate acquisition prospects and negotiate with owners as you proceed with the acquisition process.

Learn more about the “markets first” approach in our upcoming webinar How to Pick Top-Notch Markets.

After this webinar you will be able to:

  • Understand the market-driven process
  • Explain market criteria (market growth and size, competitive dynamics, barriers to entry) and how to use them to evaluate a market or segment
  • Describe effective secondary & primary market research techniques
  • Explain the triangulation technique to obtain the most relevant information for accurate decision-making
  • Develop tools to objectively compare and contrast markets

How to Pick Top-Notch Markets

Date: Thursday, February 23, 2017

Time: 1:00 PM – 2:00 PM EST

CPE credit is available,

Photo Credit: Paul Benson via Flickr cc

Mars, the maker of M&Ms and Snickers, will acquire VCA, a veterinary company, for $7.7 billion. VCA owns about 800 animal hospitals a lab business and dog day care franchises and has about $ 2 billion in revenue.

Although it may seem strange for a candy company to acquire a pet company, Mars already owns 39 petcare brands including IAMS, Pedigree and Whiskas and the acquisition will make the petcare division the company’s largest. The deal also makes sense for Mars’ long-term growth. The company, like many packaged good companies, is facing declining sales as many consumers today prefer healthy, fresh foods over packaged goods. While the CPG market may be in decline, fortunately, the petcare market is growing. In 2015, $35 billion were spent on vet care in the U.S.

Identify the Right Market for Growth

The transaction illustrates how finding the right market for growth can set you up for long-term success. For Mars, the acquisition of VCA is an opportunity to capitalize on a booming sector.

Many companies, when pursuing mergers and acquisitions think about a list of companies to buy and don’t spend much time analyzing the market. Unfortunately, this may mean acquiring a company that despite being a winner in today, is in a declining market.

Take the time to conduct a market analysis to explore the best opportunities for your company.  When faced with stagnation or contraction in your current market, you can use strategic acquisitions to pivot into a new high-growth market to ensure your long-term success.

What Business Are You Really In?

Another lesson from this transaction is the importance of really understanding your business. It’s easy to go with the most obvious choice when defining our business. If Mars simply stopped short and said “we are a candy company,” this deal would never have been executed. What’s worse, Mars could be facing serious challenges since demand for packaged goods is declining.

It’s important to take a step back and look at the big picture when you think about growing your business. What is your business really about? Don’t understate the power of this simple question. Your answer will impact the trajectory of growth you choose.

Photo credit: Leonid Mamchenkov via Flickr cc

Expanding your business into a new market, especially an international one, is an exciting, yet tricky undertaking. There are many benefits to growing your business globally including reaching a new set of customers and a new geographic market. At the same time, success does not come easily. You must grapple with regulatory challenges, cultural differences, and country-specific dynamics. One wrong step and your time, energy and resources may all be wasted.

How can you ensure your success?  Matt Craft, Vice President of Capstone addressed these issues in a workshop hosted by the International Trade division of the Virginia Economic Development Partnership (VEDP) in Charlottesville, Virginia.

In his presentation, Matt explained that success begins by considering which customers you want to reach and what markets they will be in. Next, you select the right market for your business by looking at those that have a healthy, stable demand for your products and services now and in the future. A careful analysis of future demand is important to growth. You don’t want to spend lots of effort entering a market only to find that it is shrinking. Your new international market should support your company’s long-term growth goals.

Learn more about market entry strategy in our special report: “Markets First – M&A the New Way.”

Photo Credit: Kevin Gill via Flickr cc

Finding the right partner is a crucial component of successful mergers and acquisitions and pursuing a deal with the wrong company can be a costly mistake. We’ve all seen the headlines of major mergers and acquisitions that have fallen apart at some point along the deal – whether it’s before the transaction closes or during integration. On the other hand, if done right, with the correct partner, strategic M&A allows a business to grow rapidly and effectively and gain a competitive advantage.

When searching for companies to acquire, it is important to keep three things in mind: Strategy, demand, and options.

Strategy First

Any successful M&A process must begin with a solid, strategic rationale. Why do you want to make an acquisition? What will the acquisition accomplish? How is M&A aligned with your overall growth strategy?

It makes no sense to pursue M&A simply for the sake of it with no real plan in mind. That is like starting out on a trip without a map (or GPS or smartphone) and hoping you will arrive at the correct destination. Make sure you have a plan and strategy.

Be Demand-driven

Once you have developed your strategy, you should determine the right market to focus before you being looking at individual companies. This “markets-first” approach allows you select markets that have a healthy, stable demand for your acquisition partner’s products or services. Without taking future demand into consideration, you risk acquiring a company in a shrinking market where demand for its products and services are in decline. Avoid pursuing these unqualified acquisition prospects by selecting the best markets for growth before researching acquisition prospects.

Have Many Options

While you may only be acquiring one company, it’s not enough to only pursue one acquisition prospect at a time. You do not want to spend all your time and effort pursuing one company only to risk having the deal fall apart in the end. Deals fall apart for a number of reasons – the owner get cold feet, you can’t agree on the deal terms, a competitor comes along, etc. If you have only looked at one company you will find yourself back at square one with nothing to show for all your time and effort spent chasing the deal.

In fact, it takes up to 75 to 100 candidates to identify the right deal. It’s not enough to have a plan B, you need a plan C, D, E, F, and so on. We encourage you to broaden your search for prospects to include not-for-sale companies. Not-for-sale simply means the owner is not actively considering sell – not that they will never sell the company. By including not-for-sale companies in your search you significantly expand your universe of potential acquisition prospects.

Think of your prospect pipeline as a funnel. Gradually, as you move forward in the M&A process, you will eliminate candidates that are not an ideal fit with you strategic rationale for acquisition. With the “funnel” approach you can move prospects along simultaneously, in a systematic and efficient manner.

Learn more about Building a Robust Pipeline of Acquisition Prospects in our webinar on March 17.

Date: Thursday, March 17
Time: 1:00 PM ET
CPE credit available.

Photo Credit: Barn Images

The new year is off to a rocky start. The stock market’s performance so far in 2016 is fueling worries about the economy; globally stocks have slumped, oil prices continue to drop, and investors fear a new financial crisis. While it may be tempting to panic, a challenging market also presents a unique opportunity for strategic leaders.  In today’s environment, M&A can be a powerful tool to spur growth and tackle new obstacles.

The secret to successful growth is to adopt a demand-driven philosophy toward M&A, focusing on markets that have a high potential for future growth. Rather than generating a list of acquisition targets, some of which may be in declining markets, adopt a “markets-first” approach. Investigate which markets – geographic or vertical – will perform well for years to come. Begin your search broadly, then conduct research on specific market segments. This will help you develop a pipeline of relevant acquisition candidates.

Learn more about this markets-first, demand-driven approach to M&A in our Feb. 18 webinar:How to Pick Top-Notch Markets.”  CPE credit is available.

This webinar will equip you to:

  • Understand the market-driven process
  • Identify market criteria (such as market growth, competitive dynamics, barriers to entry, etc.) and use them to evaluate a market or segment
  • Describe effective secondary and primary market research techniques
  • Use the “triangulation technique” to obtain the most relevant information for accurate decision-making
  • Develop tools to objectively compare and contrast markets.

How to Pick Top-Notch Markets Webinar

    • Date: February 18
    • Time: 1:00 PM ET

About Capstone Webinars

Learn M&A Uabout strategic growth through M&A in Capstone’s monthly webinar series. In each live webinar, a seasoned M&A expert provides practical tools and tactics to accelerate your company’s growth. Continuing Professional Education credits are available. Attend all twelve Capstone Webinars and earn the M&A U™ Webinar Certificate to display your commitment to this important field in your business education. Click here to learn more.

Photo credit: Barn Images

Strategic mergers and acquisitions can be a powerful tool for growing your CUSO, but much of your success depends on finding the right partner. How can you identify the right partner for growth?

The best way to begin your search is to identify the ideal markets in which to grow your organization. Once you have researched and selected the top markets for growth, you can begin searching for potential partners in that market that will help your CUSO grow!

Capstone is excited to be partnering with the National Association of Credit Union Service Organizations (NACUSO) for an exciting webinar. NACUSO helps credit unions explore the use of CUSOs and the delivery of non-traditional products and services.

In this webinar, led by John Dearing, Managing Director of Capstone, you will learn how to use a demand-driven approach to search for the right partner systematically and efficiently. John has led a successful acquisition program for nearly twenty years, including over ten years of helping CUSOs grow through external growth and M&A.

Date: February 16, 2016

Time: 12:30 – 1:30 PM ET

What do you do when sales decline? If you’re Diageo, you move to Africa.

Diageo, the maker of Smirnoff vodka and Johnnie Walker whisky, has been a global liquor powerhouse for years. However, the company’s growth has been slowing in its traditional markets of North America, Asia-Pacific, Latin America and the Caribbean. In other words, organic growth (business as usual) is stagnant.

In this situation, Africa offers Diageo a huge potentially untapped market. It’s no secret that Africa is on the rise. According to IMF estimates, Sub-Saharan Africa and Nigeria are expected to grow between 4-5% in 2015 and 2016. No wonder that Diageo is pursuing an aggressive external growth strategy in the region.

The company recently made a $208 million bid to increase its stake in Guinness Nigeria, which houses Diageo’s beer brands. Diageo also terminated its partnership with Heineken in South Africa in July. Both of these moves would give Diageo more control over the business in its expansion in Africa.

Diageo is also pursuing growth in the spirits trade by building its own brands specifically for the African market. The company recognizes the need to “move down market;” rather than push expensive brands. In Africa, it is focused on selling to the masses, and sales have risen 6%.

Even though Africa presents a huge opportunity, there are challenges with expanding to a new market. Diageo is not alone in eyeing Africa – it faces competition from other companies like SABMiller which is pushing for higher beer consumption on that continent. And in some markets Diageo’s spirits business and beer business compete against each other.

When faced with stalled growth, meeting demand to a new market can be a life-saver for your business. Diageo has recognized the need to go where demand is on the rise.

However different your product, you may be in a similar position to Diageo – you see the writing on the wall and your once profitable markets are shrinking or stagnant. Don’t despair. Now is the time to look to future demand. Which markets are growing? Where are new customers to be found?

Once you’ve identified a market in which to expand, think about how you’ll get there? You can use M&A to expand rapidly and effectively in a new market and ensure your business continues to thrive.

Photo Credit – Nicholas Raymond via Flickr cc

Selecting the right market is critical to successful growth. The market should have healthy, stable demand for your products or services and be aligned with your overall growth strategy. We strongly recommend selecting a market prior to identifying acquisition targets or potential partners. Without understanding market dynamics, you may be tempted to pursue what looks like a promising opportunity, only to find that the market is in a serious decline.

So how do you go about researching, identifying, evaluating and prioritizing markets? Managing Director John Dearing and Project Manager Matt Craft share the secrets to success in “Picking Top-Notch Markets” presented at for the Virginia Economic Development Partnership Program (VEDP)’s VALET spring meeting. Watch the video presentation below:

Many people begin pursuing M&A by listing possible companies to buy. But there’s a far better approach when you’re planning an acquisition.

While a prospect company may look exciting today, a closer inspection can reveal it is operating in a a shrinking market. If you’ve invested all your resources pursuing one company only to find its future growth prospects are dim, you’ve unfortunately wasted lots of time and effort. You have to return to the beginning of the process and start all over again. This situation is all to common in my experience, which is why I recommend looking at markets before looking at companies.

The main benefit of a “markets-first” approach is that it allows you to identify and follow future demand. What your customers or potential customers will want in five or even ten years is key to any company’s success.

Learn more about the “markets-first” approach in our upcoming webinar,”How to Pick Top-Notch Markets,” on June 18.

View our full webinar calendar.

Sometimes an acquisition that looked promising turns out to be less than ideal as you get closer to finalizing the deal. The question becomes: Should we proceed or should we back out?

Join me for our new M&A Express videocast, “When to Walk Away,” on May 13th. M&A Express is new, complimentary resource for middle market executives that teaches essentials of mergers and acquisitions in 20 minutes or less.

When to Walk Away

May 13th, 1:00 PM – 1:20 PM ET

Register here — it’s free

In this important videocast, you’ll learn clear criteria for abandoning an acquisition before it’s too late. The information here can save your company millions of dollars and years of heartache.

After the videocast I will be answering questions, so please have your questions ready. In the meantime you can contact or submit questions at any time by commenting on this post or using the contact form.

Learn more about M&A Express.

Subscribe to the blog.

How do you go about finding companies to buy? Do you begin your search by contacting a list of usual suspects? Rather than falling back on the usual suspects, consider using a truly strategic approach to finding the right company to buy. A demand-driven approach to picking acquisition targets will help increase your chances of successful M&A.

Join me for the second videocast in the new Capstone series, M&A Express: “Where to Start Your Search.”

You’ll learn how to look beyond the “deal” to consider long-term market forces that can make or break the success of your acquisition.

Where to Start Your Search

April 9th, 1:00 PM ET

Register here — it’s free

The information in this videocast can make the difference between a successful acquisition…. and a disaster.

After the videocast I will be answering questions, so please have your questions ready. In the meantime you can contact or submit questions at any time by commenting on this post or using the contact form.

See you on April 9!

Learn more about M&A Express.

Subscribe to the blog.

Capstone Managing Director and Georgetown Alumni (MBA ’96) John Dearing presented “Selecting the Best Market for Acquisition” for Georgetown Alumni Career Services on January 20. The webinar was the second in a four-part series by Capstone and the university on “Pursuing Mergers and Acquisitions.”

John emphasized selecting the right markets before pursuing individual companies in order to maximize the chances of a successful acquisition. After all, a business that is profitable today but in a declining market may be struggling — or even gone in a year.

To identify the right market, John said, business leaders should consider which markets they would like to reach, which industries are growing and what their customers are demanding. Next, they should evaluate which of these markets best suits their strategic plan for the business.

This demand-driven approach — perfected by Capstone over the past 20 years — has yielded a higher-than-industry standard success rate in closing acquisitions. By following the same methodology taught by John in the webinar, business leaders can mitigate their risk and increase their likelihood of M&A success.

Watch the webinar recording.

Pursuing Mergers and Acquisitions Webinar Series

  • Developing a Successful Acquisition Strategy – September 25, 2014
  • Selecting the Best Markets for Acquisitions – January 20, 2015
  • Best Practices for Contacting Owners – March 18, 2015
  • Successful Negotiation Tactics for M&A – May 19, 2015

If you are a Georgetown alumnus interested in attending these webinars live, please visit the Georgetown Alumni Career Services webpage to view a list of upcoming programs.

For those who are not Georgetown alumni, the webinar recordings will be available through our blog at SuccessfulAcquisitions.net

How do you find the best market for your product or service?

Capstone Project Manager Matt Craft answered this important question on the Market Selection Panel at the Virginia Conference on World Trade in Richmond, Virginia on October 30.

Hosted by the Virginia Economic Development Partnership (VEDP), this is the state’s largest international trade conference and is focused on expanding international business with participating representatives from the Middle East, Australia, Canada, Brazil and Mexico. The 250 businessmen and women who attended and heard Matt came from various industries that included engineering, manufacturing, professional services and IT.

Matt discussed how to go about selecting the right market and the importance of using tools for prioritization and good decision-making. As a critical step in following future demand, selecting the right market begins with thinking about which customers you want to reach and what markets they will be in.

Market selection isn’t always about geography, Matt explained, but could also mean deciding between vertical markets such as healthcare, retail, or industrial products. The idea is to select a market where you see a growing demand for your business’s services or products. By entering a growing market you can position your company for long-term growth.

In more than ten years as a Virginia Leaders in Export Trade (VALET) Program Partner, Capstone has advised many companies on the market selection process.

Learn more! Free special report:  “Markets First – M&A the New Way.”

Are you looking for more ways to grow your business? Join our webinar with Mike Melo, President and CEO of ITA International, and learn how to use proactive, external growth to gain more business in any market.

This webinar highlights ITA’s journey in developing a successful acquisition strategy and growth program using the Roadmap to Acquisitions.

ITA, a global service company providing maritime and equipment primarily to the Department of Defense, encountered a harsh market environment during sequestration in 2013. Through the initiative, the company developed a proactive plan for growth. Employing careful research and our rigorous, proven process, Capstone and ITA identified over 100 acquisition prospects in a new, expanding market: Oil and gas. While the oil and gas market grows, so do ITA’s opportunities.

Hear this exciting story and learn about best practices and tools that you can apply to your own business.

Date: October 22
Time: 1:00 PM
Cost: FREE!
Register: https://www3.gotomeeting.com/register/980243222

Don’t let the competition define your external growth strategy. Instead, plan for the people who matter most ─ your customers.

Let’s face it ─ we all care about what other people think, and in business that often means measuring how we stack up against the competition. While it’s important to keep an eye on competitors, it’s unwise to base your strategy on what they do. Playing catch-up is not a winning formula for three reasons:

1) You will always be a step behind. Necessarily, you can only react to what your competitors do after the fact. How can you be innovative if you are always waiting for…Continue reading this post on AMA Playbook.

*This post was originally published on AMA Playbook. Visit David Braun’s author page to read all of his articles.

 Many people begin by listing possible companies to buy. But there’s a far better approach when you’re planning an acquisition.

You start getting excited about a target company that has fantastic financials and is growing exponentially. You imagine the synergies the deal will generate. Success is so close you can almost taste it…but after digging a little deeper, you discover the company is operating in a shrinking market. In fact, over the next five years, demand for this market’s products and services is expected to drop dramatically.

By looking at future demand, you now realize that the company’s past growth cannot be sustained. Your prospect has gone from a gold star to a dog and after all your initial enthusiasm, you’re back at the beginning…Continue reading this post on AMA Playbook.

*This post was originally published on AMA Playbook. Visit David Braun’s author page to read all of his articles.

Facebook acquired Oculus VR, Inc, a maker of virtual-reality glasses for $2 billion. This is Facebook’s second big acquisition in 2014 – it recently purchased WhatsApp for $19 billion. With these two acquisitions Facebook is expanding beyond its current social network platform by adding new capabilities and products. According to Facebook, wearable technology is the next big thing.

“The history of our industry is that every 10 or 15 years there’s a new major computing platform, whether it’s the PC, the Web or now mobile,” said Facebook co-founder and Chief Executive Mark Zuckerberg.

Finding the Next “Big Thing”

Zuckerberg may be on to something given greater attention to  wearable tech. Google has been developing Google Glass for the past couple of years and earlier this week Luxottica, maker of Ray-Ban sunglasses, announced a strategic partnership with Google – suggesting the Google Glass will become more mainstream. Google also unveiled its new smart watch earlier this week to compete with others like Apple’s rumored iWatch and watches made by Samsung and Sony.

Staying Ahead of Your Customers

While Facebook was late to invest in mobile, it has a chance to profit from the wearable tech trend. Acquisitions allow companies to move quickly into new industries and add new capabilities, products or services. Many would view this as staying ahead of the competition, but I like to think about it as staying ahead of your customers.

In reality you want to anticipate the needs of your customers before they realize them. Your success depends on satisfying the demands of your customers and at times exceeding them. Anticipating big shift towards virtual reality and wearable devices, Facebook acquired Oculus to meet a future need. What would this approach look like for your business? What will your customers want in the future? As you plan your business growth, I challenge you to attempt thinking ahead of your customers.

 

Photo Credit: Sergey Galyonkin via Compfight cc

Japan’s Suntory is making a big investment in buying the makers of Jim Beam for $13.6 billion. Jim Beam is a highly branded U.S. company and this deal is second largest acquisition of a U.S. company by a Japanese buyer.  The underlying concept is the folks in Japan have recognized their domestic markets are not growing and they see the U.S. as a higher growth market with more opportunity to expand their product and become a significant player.

If we take a look at the numbers, the acquisition purchase price is 20X EBTDA. That’s a big number and if Suntory can’t figure out how to cut costs, and I don’t see a lot of cost saving benefits, or grow the business, they are looking at about a five percent return on their money. So this is not a huge investment return unless Suntory gets better growth out of this business.

This acquisition also demonstrates the power of moving quickly and decisively. It’s reported that this transaction came together in under 60 days. The ability to move quickly is an advantage. Suntory had confidence that acquiring Beam would place them in a market they wanted to pursue. They didn’t hesitate. This is why I emphasize a demand-driven, markets first approach when pursuing acquisition.

Before speaking with acquisition prospects, find the right markets so you have the confidence and conviction to move forward in a transaction rather than contemplating each opportunity for an extended period of time. If you wait too long in your M&A discussions with your prospect, they may lose interest or be uncertain about the deal. On the other hand, speed assures the seller of your commitment and can help seal the deal.

Photo Credit: Andrew* via Compfight cc

The New Year offers a fresh start for setting goals and creating a positive tone for the rest of the year. If you strategize well, you will find unique opportunities in the next 12 months to grow your business through M&A.

Before rushing off to find companies to acquire, however, make sure you are looking at the right markets. A business that is profitable today in a declining market may be struggling or even gone in a year. Find out where future demand is. Think about what markets you’d like to reach, which industries are growing, and what your customers are demanding. Evaluate which of these markets best fits into your strategic plan for your business.

Join me for our first webinar of 2014, “Discovering Markets.” You will learn in this presentation how to identify expanding markets and select the best segments to grow your business. Set yourself up for success in 2014 and beyond: register today: https://www3.gotomeeting.com/register/298601502

Date: Thursday, January 23, 2013
Time: 1:00 PM ET

CPE credit available.

Register today: https://www3.gotomeeting.com/register/298601502

Photo Credit: Kamal H. via Compfight cc