Targeting And Evaluating Prospects for Company Acquisitions

company-acquisitions

Acquisitions can play a key role in a company's growth as it may be more efficient to achieve objectives by buying assets and resources needed for growth. When considering acquisition prospects you need to look at a number of factors. Here's how to go about targeting and evaluating prospects for company acquisitions:


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You need to specify target industries and criteria for evaluating candidates for acquisition. Here are a number of factors to consider when targeting and evaluating prospective businesses for company acquisitions:

Desired size

How big do you want the company you are acquiring to be?

Desired geographic location of the target companies

Where are they located?

Finding target companies

Will you do use internal contacts to initiate a search? Or will you use intermediaries? Are you going to go with unsolicited offers?

Recommended reading: 13 Key Questions to Ask for Growth by Acquisition

Financials

What are the range and rates of a target company's revenues, growth, earnings and net worth?

Target company's customer base

What are the desired demographics and buying habits of the seller's customers?

Financing the purchase

What are the possible sources of acquisition financing? Including logistics for obtaining capital, and the targeted amount and method of payment.

Recommended reading: 5 Key Steps for Acquisition

Tax and stock implications

What is your tax and financial preference for asset vs. stock transactions.

Desired financial returns

What expectations do you have from the financial returns from the new acquisition? 

Operating Synergies

How can you maximise the synergies in operations from the acquisition? 

Shareholder Impact

What is the impact of the acquisition on existing shareholders?

Competing Bidders

Are there any other possible competing bidders for qualified candidates?

Acquisition Team

Who are the members of the acquisition team going to be and what is each of their roles?

Risk 

What is the nature and types of risks you are willing to assume, including your willingness to consider turnaround or troubled companies?

Management Teams

What is your company's intentions regarding retention or replacement of the target company's management team (even if this plan would change when a different company is acquired)

Partial ownership?

What is your openness to partial ownership of the seller's entity or a willingness to consider a spin-off sale, such as the purchase of an operating division's assets or a subsidiary's stock?

Unfriendly takeovers

What's your interest in launching an unfriendly takeover of a publicly-held company or buying debt from the largest creditor of a privately-held company?

Over to you now. Any other factors to consider with identifying acquisition prospects? Tell us in the comments below. 

 

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