It’s a well known statistic that approximately two-thirds of acquired businesses fail. While these stats are based on publicly traded companies with failure measured by loss of equity value, there is no reason to believe that the failure experience is any different for private companies.
The statistics are daunting; however, companies continue to be acquired for a variety of good reasons and not all acquisitions fail. While the success or failure of an acquisition is often based on post-purchase issues (such as the melding of company cultures), there are five strategies that can help you beat the odds.
1. Strategic Acquisition Plan
First and foremost, understanding the motivation for acquiring a company is the first step to a successful acquisition. If the reasons for purchasing a company are clearly stated and supported, that laser-like focus will help: guide your purchase decisions; communicate your objectives to employees, service providers, and potential companies; and provide a benchmark to measure your success. To clearly define your motivation, ask yourself: (more…)