When our new clients inquire about how we make prioritization decisions with limited data in the world of M&A, our answer is simple and straight-forward – you don’t need all the information as long as you have the CRITICAL information. Consider this process:
• Step #1 – You need “screening” criteria that will help you (and your group) make a decision.
• Step #2 – Find a trial acquisition prospect.
• Step #3 – Gather prospect specific data for the priority criteria.
• Step #4 – Test and refine your criteria.
• Step #5 – Add acquisition prospects and benchmark how they “fit” versus the criteria (and against each other).
Use screening criteria and acknowledge you are not in due diligence so you don’t need everything at this phase of the prospecting process. Evaluate acquisition prospects and SAVE resources by focusing on only gathering the RIGHT information.

I have frequently been approached by clients after a deal suddenly fell through — a deal they had been working on for months or even years. For example, I recall a manufacturer of aviation parts that was convinced they had found from the start the “Holy Grail” of acquisition targets. They believed this prospect was the perfect fit for their external growth needs. They cast aside any other candidates and poured all their energy into the pursuit of this one company. After months of positive negotiations, the prospect abruptly got cold feet and backed out. The owner decided he wasn’t ready to sell a business that had been in family hands for multiple generations. The aviation company was left to start the entire process over.

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