News and Insights on M&A for the Middle Market
Many company owners and executives know that M&A could hugely accelerate their growth. But they hold back for several common reasons. Let's take a look.
- "There are No Suitable Companies to Buy"
- "If a Company is Not for Sale, I Can't Buy It"
- "We're Not Big Enough"
- "We Don't Have the Expertise"
- "We Tried This Once and Failed"
You're probably right—almost. There are no suitable companies for sale. That does NOT mean there are no great companies to
buy. You just have to look beyond those that are marked "for sale". Generally, it's much better to pursue not-for-sale companies, for a host of reasons. The company is less likely to have problems; you won't be competing with other buyers; and no one need know about the transaction until it's complete.
Every company is for sale… for the right equation. Note the word here is "equation" not "price". Many owners would be glad to sell if they could find a buyer with the right vision, and who understands their unique (sometimes very personal) needs — for example to look after family members employed by the firm, or keep the company brand unchanged, or provide certain special benefits with the deal.
There's a myth that M&A is only for giant corporations. That's because these are the only deals that make the news. In reality, the vast majority of acquisitions are valued under $500 million. Private transactions don't require reporting at all, so you would never get to hear of them. Furthermore, making a relatively small, highly focused acquisition is usually more profitable than trying to harpoon a whale!
Knowing you don't have the expertise to pursue and acquisition is actually a strength. Many owners try a learn-as-you-go approach and experience costly failure. M&A expertise, like any other expertise, can be purchased. And you don't need to hire full-time M&A staff: you can contract with an outside advisory team that does nothing but help companies with acquisitions and related growth strategies.
Who grew anything worthwhile without experiencing failure? No deal is guaranteed to succeed. The most likely cause of your earlier failure was inadequate market research, or too few qualified targets to choose from, or over-combative negotiations. There are other traps we'll discuss in later articles, but all can be mitigated—and most avoided—by assembling the right team to manage the acquisition.
Do you have another reason not to grow through acquisition? We'd love to hear from you so we can discuss your ideas in later editions of the Growth Bulletin.
P&G to sell over 105 brands
P&G will refocus its portfolio on 10 fast-growing category-based business units.
Microsoft to acquire LinkedIn for $26.2 billion
The acquisition, which is Microsoft's largest, will provide opportunities for cross-selling and developing new products and services for professionals.
Uber sells China Operations to Didi Chuxing
Both rivals have spent lots of time and money competing in China, but neither have been profitable yet. Uber will now focus resources on fast-growing cities profitable markets, and new initiatives such as self-driving technology.
Plan first, execute second!
Before running off to pursue companies to buy, make sure you plan your overall strategy.
The point of pursuing acquisitions is not for the sake of buying another company — rather, it should be a tool for reaching your strategic goals.
This foundational step will determine the success or failure of your program. Acquisitions are inherently risky and those who come to the table armed with a plan increase their chances of success.
Check out the latest events from M&A U™
Mastering Valuation for M&A
September 21, 1:00 PM ET
Join Capstone for a webinar on Mastering Valuation for M&A. The webinar will cover core concepts around valuation and demystify key terms and processes.
The webinar is designed both for valuation novices and those who need a refresher or more clarity on valuation in M&A.