Hello Friends!
During the mergers and acquisitions (M&A) lifecycle, there are eight key phases through which you must navigate.
The M&A Lifecycle:
Strategy
Valuation
Financing
Structuring
Due Diligence
Negotiation
Closing
Integrating
But to make the right decisions during this process, emphasize the Strategy phase.
What, though, are the main factors of the Strategy phase?
Finding Your Main Competitors
The first part of the strategy phase is to look at all the competitors you must overcome, acquire, or partner with. Knowing who you are up against (their strengths and weaknesses) is vital.
The next step is to draw out a Venn diagram of both companies to see what areas overlap.
Then prioritize the areas that don't overlap to see if you need to focus on them more or pivot in a different direction.
This list of priorities will make the next step that much easier.
Finding Complementary Companies and Assets
The best thing to look at is businesses that your company already relies upon (bolt-ons), for example, suppliers, manufacturers, marketing agencies, or consultants.
Let'sLet's look at the scenario of a current supplier or distributor. Instead of waiting in line for your business to get its orders processed, what if you simply acquired this company?
Then, you can prioritize your orders while the experts behind the acquisition continue to do what they do best, cross-pollinate business, and reduce your cost of goods sold (COGS).
Another great and cheaper acquisition opportunity is marketing (digital traffic) assets.
You can buy websites, videos, email lists, pixels, Amazon listings, Etsy stores, eBay stores, podcasts, social media groups, and even YouTube channels!
Now that you know what some of your options are, a mind map is the next best step.
Draw a circle in the middle of a blank paper with your compani’s name on it.
Then add three new circles to it for competitors, bolt-ons, and traffic assets.
Add all the acquisitions that you can think of to this mind map before making your final hit/shopping list.
Here is a list of free mind mapping software, https://thedigitalprojectmanager.com/mind-mapping-software/.
I personally prefer a whiteboard.
And when you think that you have already mapped out every possible acquisition opportunity, go back to your list of priorities from earlier.
If you're still a bit tentative about making a full-blown acquisition, a joint venture (JV) is the next best option.
Why Does the Strategy Phase Matter in M&A?
Before you move into the valuation process to see what the target company or asset is worth, it is always important to have clear goals and timelines on what you want out of an acquisition.
7 Buy-Side M&A Pitfalls goes over the most common transaction mistakes and serves as a pre-LOI (Letter of Intent) checklist.
At the same time, traffic assets are usually quick transactions, but a business acquisition will take about two months to complete.
Save your time and energy by being specific about what you're looking for.
Lastly, remember that acquiring will always let you bypass all the pitfalls of starting from scratch.
And to make things even better, a well-executed strategy will turn your business into a healthy cash cow that can support you for years to come or get you a larger multiple when selling.
Looking to Develop An M&A or Growth Strategy?
If you want a hand in developing the best possible strategy for your company, get in touch with ASE today.
Together, we can work towards the right strategy for your business to boost your business's size, scalability, and profitability.
Growing through acquisitions also includes the following:
Social: FB Ad Account
Social: FB Page
Social: IG Account
Social: YT Channel
Group: Facebook
Group: LinkedIn
SEO: Blog/Vlog
SEO: Website
SEO: Video
List: Pixeled Audience
List: Subscribers
List: Email List
List: Email Account
Ecom: Ebay Account
Ecom: Ebay Store
Ecom: Etsy Store
Show: Podcast
Show: Radio
Show: TV
IP: SaaS
IP: Paid Plugin/Widget
Etc…
Source: https://www.acquirescaleandexit.com/what-is-the-strategy-phase-of-the-ma-lifecycle/
Post Of The Week
By Jason Cason on Facebook
""Due diligence can be an extremely daunting part of an acquisition. If you don't turn over every stone and look over every file with a magnifying glass, you could end up buying a house fire. And that's assuming you know exactly what to look for!
There are many great firms out there who can perform thorough due diligence on your deal, but they can quickly eat through your precious margin. The best thing you can find is a partner who has years of experience going through the acquisition process with a near-perfect track record. All you have to do is go find one!
Don't know where to start? I can't blame you there. They seem to be in short supply!
Our team has performed due diligence on hundreds of deals and has nearly perfected the process. Every store we buy has undergone a ruthless inspection period to ensure they meet our strict quality standards. This way, we can ensure our investors are purchasing a sound business with no surprises.
Our passion is helping investors create wealth through M&A. I am happy to provide any insight, guidance, or deal I can as long as it will help you take a step toward your goals. If your focus is on building a partnership in the M&A space, reach out to me. I'd love to hear about your journey and try to build some value for you.""
Deals Of The Week
Here are all of our off-market companies for sale and a list of vetted business buyers:
https://docs.google.com/document/d/1wU2ZctV_KZnNDPpS_NNpLNp2nhNMLxOn5YbVZIwlyQU/edit?usp=sharing
Best viewed on PC for a clickable table of contents on the left.
Financial Engineering Tip Of The Week
ERC - Coronavirus (COVID-19) Economic Relief Legislation
Has your business been impacted by COVID but still supporting your employees? You could be eligible for a refundable retention credit of up to $26,000 per employee.
The CARES Act was signed into law on March 27, 2020, to address the negative economic impact of the COVID-19 pandemic. Within the CARES Act, Congress created the Employee Retention Credit (""ERC""), a fully refundable payroll tax credit, to provide aid to employers impacted by the COVID-19 pandemic.
ASE has an experienced partner ready to file your ERC application!