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Acquisition Strategies from a Buyer’s Perspective

By Generational Equity

03/15/2021

One of the most important skills you need to develop as you consider the exit from your business is to begin looking at your company as a buyer would.

Why does this matter?

Because all too often entrepreneurs find themselves so involved with the daily operations of their business that they don’t take the time to really look at it as a buyer and consider that the company is truly an investment, not just a job.

This is one of the main themes we stress in our Growth and Exit Conferences: Helping business owners to see the company that they are working so hard on growing as truly like any other investment and that building it in a “buyer ready” manner is vital.

Along those lines, I came across a recent article from Axial entitled “How to Develop an M&A Strategy that Aligns with Your Growth Story”. Written from the perspective of three professional buyers, it really summed up what these folks are looking for when they outline their acquisition strategies.

They discuss their focus with three key themes:

  • Develop an M&A strategy by asking yourself 3 key questions – What is the value creation thesis of your company? How does the target make you, the buyer, better? How do you make the target better?
  • Stay the course and focus on the value drivers – Are the seller’s goals aligned with what you want to do? Look at the fit. Will integration require a fundamental change in either business?
  • Align an M&A strategy to the growth story you want to tell – What is your vision for where you want the business to go? How will acquisitions affect the growth story you want to tell? Is the inorganic value you’re adding something you definitely want to buy (vs. build or partner)?

What these buyers are all essentially saying is this: Be sure that the acquisition target will add value to your existing organization. If it does not, then pass!

The key though is ensuring that your documentation highlights your tangible and intangible assets so that buyers will see the added value your company will bring to the table.

This documentation must go beyond just your balance sheet and income statement. You have to be able to clearly delineate what your business has to offer to a specific potential buyer. So your offering memorandum has to be very detailed and clearly highlight what makes your business unique.

This is where marketing a business for sale can become challenging for those that have not done so before. One of the reasons that Generational has been so successful is that our deal teams have the experience to do two key things:

  • Highlight each company’s intangible assets
  • Identify which buyers are the best fit for our clients based on our knowledge of what each buyer is after

Both of these are critical in finding optimal buyers and closing great deals for our clients!

If you would like to see a sampling of our recent track record, you can do so here:

And to find out how we can potentially help you grow your business into a buyer ready entity, use the following links:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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