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.

Technorati Tags: Acquisition Strategy, acquisitions, business acquisitions, Capstone, criteria, External Growth, John Dearing, M&A, mergers, Mergers and Acquisitions

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.

The lesson is clear. Have one reason for making an acquisition, but have many viable prospects. Don’t just have a Plan B — have a Plan C, a Plan D and so on. Create a funnel and fill it with likely prospects.

The concept of the prospect funnel is that you begin by considering a broad sweep of companies (it could be dozens or even hundreds). Gradually, you filter this list through your prospect criteria, eliminating weaker prospects step-by-step. At each stage as you move down the funnel, your research becomes more detailed and your analysis more exacting. Finally, you will identify a handful worth engaging personally, and from these you will select the company or companies with whom you initiate negotiations for a purchase.

Technorati Tags: Acquisition Strategy, acquisitions, Capstone, criteria, David Braun, External Growth, M&A, mergers, Mergers and Acquisitions

This Friday, February 20, I will be holding a free webinar on “Finding the Right Markets for Growth” at 1:00 PM ET.   You can register by clicking here.

In these tough economic times, market research and selection are vitally important to position yourself for growth now and in the future.

Capstone Program Manager Gretchen Johnson will be joining me to present on the following topics:

- Current State of the M&A Market
- How to Determine Where the Opportunity Lies
- Why to Research Markets First
- Developing and Implementing Market Criteria
- Market Segmentation
- How to Conduct Effective Market Research

The webinar is free and open to the public.  Gretchen and I will speak for approximately 45 minutes followed by a 15 minute question and answer session.

Here, again, are the details.  Please join us!

Date: Friday, February 20, 2009

Time: 1:00 PM ET/ Noon CT/ 11:00 AM MT/ 10:00 AM PT

Registration:  https://www2.gotomeeting.com/register/460174264

Technorati Tags: Acquisition Strategy, acquisitions, criteria, David Braun, External Growth, M&A, market research, mergers, webinar