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

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

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:

“How often do you get involved in a situation where a company is pursuing a ‘usual suspect’? And how do you handle it?”

This question was asked after Capstone’s presentation on “How to Pick Top-Notch Markets” by Project Manager Matt Craft and Managing Director John Dearing at the Virginia Economic Development Partnership’s VALET spring meeting.

This is an excellent question because the situation is extremely common. A “usual suspect” is a company that easily comes to mind because you already have an existing relationship. It may be a supplier, competitor or industry partner or it may be a company owned by your CFO’s sister. Naturally, because “usual suspects” are the easiest prospects to find, many companies begin their M&A search with them.

There’s nothing wrong with looking at them, but because of your pre-existing relationship it may be difficult to remain objective. In addition, we find that many times clients are only considering one familiar company and no other options.

When studying a usual suspect, we recommend taking a step back to remain strategic and objective throughout the M&A process. Use strategic criteria to objectively assess the company. How does the company align with your strategy? Is it really a good fit? Or have you been blinded by love?

We also recommend considering at least two other companies so you have three options for the sake of comparison. Without a comparison, by default the usual suspect will be the best and only prospect. If it’s truly the best prospect, it will withstand the scrutiny of criteria and comparison to other companies. You may even find that one of the other options is actually a better fit for your company

We know it’s difficult to say “no” to the usual suspect, especially if you have your heart set on it, but remember, acquisition is a huge undertaking. You cannot afford to make a decision based on emotion or incomplete information. Consider multiple options and use strategic criteria to make the best decision about your acquisition prospects.

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Learn more by attending our webinar “How to Pick Top-Notch Markets.”  Click here to register.

When thinking about the best market for acquisition, many tend to focus on the market (or markets) in which they already operate.

People feel very confident about what they know, for good reason– experience, past success, existing relationships, etc., but sometimes focusing on only one market means your perspective is myopic.

There is little harm, other than perhaps some time and money, in exploring adjacent markets. Taking a look at neighboring markets can validate your assumptions and give you confidence to move from planning to action.

The worst case scenario would be that researching adjacent markets yields no new information and you’ve wasted your time. However, in my over twenty years of experience, clients have always gained some new and different insight from considering adjacencies. They have never walked away empty-handed.

Most likely you will find new opportunities for acquisition or even for organic growth. I encourage you to open your business to innovation by exploring adjacent markets.

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.”

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

* Guest post by Paul Marin, Research Analyst at Capstone

Did you know twenty of the fastest growing economies are in Africa or Asia?  William Blair reports in the first quarter of 2013, the Americas invested $7.0 billion in Asia-Pacific in cross-border transactions, a 4.6% increase from 2012.  This means many of the opportunities for growth may be abroad.

International expansion can be a rewarding and exciting way to grow your business and find new markets.  You may be competing in a highly saturated domestic market with diminishing growth prospects. Seeking new foreign markets is a natural response to your company’s domestic stagnation.

Markets in developing countries look particularly appealing. Not only are they growing rapidly, but they also lack well-established players that can compete vigorously.

Even problem-ridden mature regions like Europe offer great opportunities. In fact, the European Union’s middle market companies attracted the most foreign investors in the world in the first half of 2012.

It is not hard to see why M&A in the European Union has attracted investors. The recession and uncertainty triggered by the European debt-crisis have deprived companies of customers and financing forcing them to turn to alternative sources of funding to survive. In other words, structurally great middle market companies are selling at a discount.

Opportunities for strategic partnerships also abound. Despite the European Central Bank’s efforts to lower interest rates across Southern Europe, a liquidity crunch is squeezing usually successful firms. As the Financial Times reports, this has made Spanish companies partner with former rivals that have more plentiful access to financing and low interest rates. Such arrangements are not only mutually beneficial but can also be highly lucrative.

One way to take advantage of these international opportunities is through acquisition. The right acquisition can mitigate some of the risks inherent in venturing internationally

The key advantage of an acquisition is that it is a “ready-made” solution that can help you navigate unknown foreign business territories.

Companies that expand internationally are faced with a host of problems including cultural differences and language barriers that can derail promising deals. Political risks such as corruption, arbitrary enforcement of regulations, or outbursts of nationalism cannot be adequately dealt with in absence of deep local knowledge.

A well-executed acquisition brings an experienced team that understands the local market. The acquired company already has an infrastructure for business in that country: regulatory approvals, facilities, relationships with customers and suppliers, and an understanding of the local markets.

Although international expansion can be an exciting opportunity for growing your business, venturing abroad is no silver bullet for curing domestic market funks. Your plan for bringing your business overseas must be strategic and carefully planned. No matter how good an international market may seem, without a strong strategy, your plan may fail. But, with the right strategy, a carefully planned acquisition or strategic partnership can help your company gain a global foothold.

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