Throughout my career, I have been involved in several high-growth companies.  Some of these companies grew organically by adding new locations over time to bolster their portfolios.  Others focused their growth through acquisitions – essentially using their capital to purchase existing competitive locations to expand their network.   While there isn’t just one path to successfully grow your enterprise, growth through acquisition, in my opinion, can be far more daunting.   

There are many steps to consider when growing through acquisition and the “deal” is only one aspect of the strategy.  I have been a part of large organizations where we would be “off to the next deal” before we fully realized the expected value of the deal at hand.  An acquisition company must exhibit tremendous discipline to ensure that what was expected in the deal, was ultimately delivered.

Resources can become a challenge as many of the same people are tapped for both the deal-making and the integration often leaving very little time to do both roles effectively.  The deal is always the most exciting part of the process and the “sausage-making” of integration is often viewed as mundane. 

Here is a high-level list of steps to consider ensuring that the deal details are met:

Pre-Acquisition Planning:  Before anything, companies need to develop a strategic rationale for an acquisition strategy and how the potential purchase fits into the long-term goals.  Once that is in place, a list of targeted companies is developed, and initial screening takes place to cull the list.    

Due Diligence:  Next up on the list is a series of due diligence reviews:

• Financial – are the numbers presented verifiable?
• Legal – are there any issues with existing contracts, intellectual property or compliance?
• Operational – evaluation of operations, processes, supply and IT
• Human Resources – evaluation of employees, culture and contracts
• Market – Customer base evaluation and competitive landscape

Valuation and Financing:  This is a big one – coming up with a valuation and price that gets the sellers attention without overpaying.  Included in this is the value of assets and comparison against industry benchmarks in addition to the expected synergistic values that this acquisition will fetch.  Sometimes companies will overpay for a deal because they anticipate gaining far more in synergies to justify the deal price.  Lastly, how the purchase price will be structured (debt, equity, internal cash, etc.) needs to be ironed out.       

Negotiation and Agreement:  Both parties come to the table and the deal begins to take shape.  There is an initial offer with a Letter of Intent (LOI) followed up by a series of negotiations.  Deal terms, earnouts and performance-based considerations are all discussed and hammered out and if both parties agree to terms, a final agreement is crafted and put in place.

Integration Planning:  As a mentioned earlier, now the sausage-making can begin.  There needs to be a detailed integration strategy that encompasses cultural, operational, and financial integrations.  Every stone needs to be turned over here or the onboarding process can be derailed.  Tracking all these integration steps not only ensures that the deal has been brought on board appropriately but makes the organization stronger when evaluating the next deal.

Post-Acquisition Review:  But don’t stop at integration.  Ensure that a thorough and detailed post-acquisition review is put into motion.  This would include performance monitoring; synergy realization and overall “lessons learned”.  The more organizations go through this complete process, the stronger they should be in their identification and onboarding of future deals.

Communication Plan:  Last but not least, a detailed communication plan needs to be developed that addresses the updates required for numerous audiences.  Articulating the strategy, process and results of an acquisitions to employees, media, vendors and stakeholders makes everyone informed and aligned.   I would be ahead of the news as opposed to being in reaction mode.

Acquisitions can catapult an organization’s strategic vision into hyperdrive when it is implemented correctly from deal to integration.  There are many steps that must be executed flawlessly to be able to extract the greatest amount of value from the deal.  While the deal announcement may make the headlines, it is execution that can make-or-break its overall success.

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