Before the pandemic, it was a strong sellers’ market, leaving many prospective acquirers on the sidelines. But recent events have changed that for many industry sectors. Many CEOs try to time their business acquisition strategy to favorable economic data: the proverbial “buyer’s market.” But BIG companies with a true growth mindset know that a well-defined acquisition strategy can pinpoint opportunities no matter what’s happening on Wall Street or what the latest CPI report says.
We are now in a window of acquisition strategy to acquire at lower valuations than in recent history. For those CEOs who wish to grow through acquisitions, now could be the best time to execute transactions for the foreseeable future.
When executing an acquisition strategy, the commodity most wasted is time, resulting in opportunity costs. Given that this window may be short-lived, it is important to be laser-focused on finding the right acquisition opportunities that have the highest probability of helping you achieve your strategic objectives.
What is an acquisition strategy?
Strategic acquisition, also called an acquisition strategy, is a method that one company uses to gain or purchase another, hoping the consolidation of both companies can prove to be more profitable than one by itself. In business terms, strategic acquisition usually occurs because one company thinks it can benefit from synergies.
How to execute acquisition strategy?
Below are some points to plan and execute an effective acquisition strategy:
Creating an acquisition script
In general, there are two types of acquisitions: the Friendly kind, in which both companies recognize the benefits and work together towards a shared set of goals; and the Coercive kind, in which the acquired company goes along with the sale because.
Coercive acquisition can be just as effective as long as the buyer has clear objectives and a plan for achieving them.
Corporate cultural compatibility.
“Bridging corporate cultures into a common core and allowing a bit of each to survive is important,” says CEO Coaching International’s Michael Maas. That’s going to be difficult without the companies sharing some core values in the first place. An ice cream social isn’t going to turn an acquired company that’s all about profit into a new division that puts the customer first. Nothing trumps culture fit, no matter how BIG the numbers look.
Determine your primary aim
Defining your primary objectives provides you with a purpose for strategic acquisition and can help you streamline your efforts for a specific outcome. Whether you’re looking to gain talented professionals or boost your market shares, understanding and identifying the most important goal can help guide the rest of the process. Once you have a complete idea of your primary aim, you can then focus your acquisition efforts accordingly.
Retention
In a successful acquisition, you’re not just buying technology, inventory, and office space. You’re acquiring people as well. Make every effort to retain A-players who will enhance the new company’s culture and raise everyone else’s game. Sniff out any mercenaries who might stick around for a higher paycheck and “quiet quit.”
Communication is the key
It is essential to communicate to each group of stakeholders the reasons behind the merger and acquisition and the value and associated costs it will bring to each group. Transparency is key. If employees at both companies aren’t receiving regular updates, they’ll make up their own. Rumors and paranoia will turn your people on the deal before it’s done, kill productivity, and send some of your best and brightest out the door.
Share a BIG vision that everyone who’s invested in your company will want to be a part of.
Empathy
Employees from an acquired company often go through an accelerated version of the grieving process. Again, clear communication is critical. But so is high-EQ leadership. Just asking people how they’re doing and how you can help them manage this transition can go a long way towards lowering the temperature and keeping everyone focused on the key tasks of the day.
Consider a transformational merger
Consider a transformational merger, which is a strategic acquisition where the deal completely changes how the new company operates. In this type of merger, the acquisition is likely to cause long-lasting effects on things like production and operations and establish a new business model. This can be beneficial to the customers because it provides them with alternative solutions or products.
If growth by acquisition is the strategy, then crisp but carefully planned execution often results in optimal strategic outcomes.
