No matter what you do in business, it should be done methodically with a lot of thought put into it. This is especially true for making acquisitions. Instead of leaping on a sudden opportunity, it’s important to realize that acquiring a target is a big commitment.
In order to identify potential acquisition targets, you first need to determine the types of opportunities that exist within your market and what types of transactions are taking place. In other words, focus on other businesses first before focusing on your own.
This might sound like some seriously bad advice for business owners, but when it comes to identifying acquisition targets, you want to let the market around you speak instead of letting your own voice be heard. This will help to keep your business safe and also provide you with the chance to jump in at the opportune time.
When it comes to actually identifying the targets, there are a number of ways in which this can be done. It basically depends on what you’re looking for. Believe it or not, some of the best people to help you identify acquisition targets are those working closely with you and your business. This could extend to business partners, suppliers, long-time customers, etc.
Some businesses send people out to trade shows to brainstorm for acquisition ideas on the floor. They’re up close and personal with these targets, looking at what best fits with the direction of the company. Sticking with the inside industry theme, a good search method is to subscribe to your industry’s publications and do your research.
The Internet always comes in handy for identifying acquisition targets. By checking either Google or Yahoo! Finance, you’ll find a list of competitors besides each company’s listing and that will give you a pretty good idea of the marketplace and help you to narrow your targets.
Sticking with the Internet theme, do a search for industry studies and other analytical aspects of the industry. It really becomes all about what’s best for you and your company more than what’s available out there.
Targets will make their way to you, so you’ll never have to look for long. Identifying what’s right is the trick, and that brings us back to keeping an eye on your market competitors and seeing how they’re handling business.
For instance, if your competitor has recently made some high-value acquisitions, you should focus on how this is working out before leaping into doing the same. The natural inclination might be to exercise your purchasing power to keep pace. But this is acting hastily. If these acquisitions don’t pay off for your competitor, then you’ve gained ground without having to invest.
If your competitors have been checking out targets but haven’t purchased them yet, then you may want to think about stepping in and taking that opportunity away. Likewise, if your competitor isn’t looking for acquisitions at all, this might be the perfect time to step out ahead.
It should all be handled slowly and wisely. Never jump into anything. Identify and study every target and see if it’s the right fit for your current business model. Business is competition, and this is not time to get in over your head.