Growth through strategic acquisitions can be a good way to increase the profitability of the company. Especially looking for companies that can accelerate their growth through the use of your company resources is very economically attractive. This blog outlines how to achieve growth through acquisitions in 8 steps.
- An acquisition strategy
With the development of an acquisition strategy you determine which type of companies you are looking for. It is particularly important that these companies can accelerate through cooperation. This can be achieved, for example, by the technology that you have in-house. But also by having access to larger customers or customers abroad. In addition, it is important that you yourself have the necessary capacities to realize the intended synergy after the acquisition.
- Defining your target group
Not every company is suitable for you and your organization to take over. Therefore, draw up a number of criteria that a company must meet. These can be things like the type of company, the company size, the company location and the industry. Search for a number of potential companies based on these criteria and see if they are suitable.
- Test the company
Have conversations with the first selection of companies to see if they fit within the strategy that you have in mind. During the interviews you can find out if they indeed meet your criteria. There is also the possibility to collect more information about the company. Finally, not unimportantly, you can test whether the company is open to far-reaching cooperation or a takeover.
- The valuation analysis
Is a company open for a takeover? Then it is time to determine its value. With a valuation analysis you chart the economic value of the shares of the company. This provides insight into the risks of the purchase. A commonly used method is the so-called DCF. This stands for the Discounted Cash Flow method.
The company has proven to have sufficient financial potential through multiple valuation methods. Now the negotiations can begin. The first bid can be made on the basis of the results of the valuation analysis. After this, further negotiations on these and other conditions can continue. The negotiations culminate in a letter of intent.
- Due diligence investigation
An important step in the M&A process is the due diligence investigation. With the help of this investigation you, as a buyer, investigate the risks of the merger or acquisition. In the absence of such an investigation, you cannot recover any damage after the acquisition from the selling party. The purchase agreement can be drawn up on the basis of the due diligence investigation and the letter of intent.
- Purchase and sale contract
No insurmountable risks surfaced in the previous steps? And is there a bid that both parties are satisfied with? Then the final contracts can be drawn up.
- Closing the deal
All details have been discussed. Financing is complete. Your management teams and the teams of the acquired organization will discuss what the business organization will look like from that moment on.
This way you can achieve growth through acquisitions in 8 steps. Are you ready for the acquisition of a company? Read about it in this blog.