Acquire and integrate other companies for growth

Question:

Do you have a plan to target and acquire to drive your company growth?

Answer:

At The Alpha Group we make certain that you plan how to successfully finance, acquire and integrate another company.

So, how does this happen?

Easy, its a six step-process using the power of the peer-to-peer advisory board.

-

Firstly the peer-to-peer advisory board help you identify what is your strategic problem.

Over recent years you have grown your business at an OK rate. You have achieved this by penetrating your chosen market, by introducing successful new services and/or products and by recruiting additional people. In other words, you have built your business by organic growth.

However, over the next two years, you want to achieve much faster business growth. You’ve investigated other growth strategies such as joint ventures, overseas expansion and building your online business. These strategies should increase your business growth, but you may feel that your desired fast growth could be better achieved through buying (acquiring) other companies effectively and then building you into a coherent whole with your company i.e. integrating your acquisitions successfully.

There are some good examples of medium sized companies who have implemented your successful buy and build plans. As a result, they have created strong, profitable positions. However, there are also plenty of examples of companies who have failed spectacularly with your buy and build plans and therefore waste large amounts of money, time and company value.

-

Secondly the peer-to-peer advisory board help you decide your goal and preferred type of company to acquire.

Decide your goal for your buy and build plan

Business Leaders buy or acquire other businesses for a number of reasons. Using the list below, asterisk your key reason for acquiring another company:

a. broaden your ranges of services for your chosen market

b. expand your geographic coverage in your chosen market

c. acquire a new product, with the intellectual property, which they can sell to your existing customers

d. where your current market is fragmented into many small companies and hence there is good potential for rationalisation and economies of scale

e. where the cost of acquiring customers is significantly more than acquiring a company with a customer base

f. acquire a new brand

g. expand into new markets

h. acquire facilities

Please asterisk your preferred reason & then write this a bold, measurable goal.

Write your bold goal in Box A in 8 to 10 words, starting with an action achievement verb.

Write your goal on a small post-it and display it in front of you.

Decide your preferred type of company to acquire

Given your goal above, now decide your preferred type of company that you want to buy (acquire). Some possible types of company could include:

a. a smaller company where the owner wants to retire but wants the company to have a future without him/her

b. a company like yours but in a separate geographic area to you

c. a company in which you have a successful joint venture and where you both can see a good fit from merging

d. an ailing company (i.e. in administration or failing) which you believe you can integrate with yours and implement your proven management systems

e. what other type of companies are there for you to buy?

-

What is your preferred type of company to buy?

•

Thirdly the peer-to-peer advisory board help you finance your potential acquisition.

There are a number of options for you to raise the finance for your buy and build plan.

Using the list below, asterisk your 3 preferred options.

a. From your retained profits

b. Unsecured loans at low interest

c. Grant seed investment for businesses

d. Shorter term bank loan (less than 2 years)

e. Asset based finance

f. Bank overdraft

g. Refinance your existing assets (e.g. equipment & vehicles)

h. Equity investment by suppliers

i. Trade finance

j. Crowd-sourcing investment (i.e. attracting a number of small private investors)

k. Funding circle (i.e. obtain small loans from a number of individuals)

l. Corporate venturing (i.e. attract a big company to invest in your company)

m. Commercial property mortgage

n. Long term bank loan (i.e. longer than 2 years)

o. Mezzanine finance (providing the lender with a share in the future success of your company)

p. Flowering shares (i.e. flexible preference shares)

q. Win/Win/Win/Win

r. Personal investment/pension fund

s. Sale of property, boat, plane

t. Share purchase (shareholder “buy-ins”)

u. Deferred consideration (pay later)

v. Seller finance (i.e. earn out)

w. Business angel investment (<£250k)

x. Venture capital investment (£1⁄2m to £5m)

y. Private equity investment (>£5m)

z.

Now double asterisk your key one.

What is the strategic conclusion about your preferred option?

-

Fourthly the peer-to-peer advisory board help you acquire the other company effectively.

Which of these 8 steps in the process are crucial to your success?

Please asterisk your 3 crucial steps.

-

1 PREPARE

Decide your growth goals and preferred type of company to buy and share it with your staff

2 IDENTIFY

Identify and research your priority target companies

3 PROMOTE

Prepare a compelling summary of the merged businesses

4 EXPLORE

Meet with target sellers to explore the strategic fit

5 NEGOTIATE

Agree the heads of agreement and terms with your chosen company to acquire

6 DECIDE

Create your post-acquisition integration plan

7 CONTRACT

Conduct successful due diligence and finalise the sale and purchasing contract

8 ANNOUNCE

Brief your staff again and implement your integration plan

-

Step 8 is the critical step in the process. It is the step which is most likely to fail and will take a lot of your time after the acquisition. Therefore the peer-to-peer advisory board help you create your powerful integration plan so that this step is executed flawlessly.

-

Fifthly the peer-to-peer advisory board help you decide your goal and your priorities for successfully integrating this new company.

From page 2, what is your BOLD goal for acquiring a company. Put your post-it in the box below:

YOUR BOLD GOAL FOR ACQUIRING A COMPANY

Also from page 2, what is the preferred type of company that you want to acquire:

YOUR PREFERRED TYPE OF COMPANY TO BUY

In Box C below, write your key goal for integrating your acquired company. Make this goal SMART i.e. Specific, Measurable, Achievable, Realistic & Time-bound. Write your goal in 8 to 10 words starting with an action, achievement verb.

Now write your key goal from Box C on a small post-it and display it in front of you when you work on pages 6 and 7.

Identify your priorities to successfully integrate your companies

From the list of potential options below and overleaf, asterisk your 6 priorities.

Write each option on a small post-it.

1 CREATE CLEAR COMPANY DIRECTION AND STRONGER COMMITMENT

A. Create clear direction

1 Identify and remove the strategic & cultural barriers to integrating your two companies

2 Create your compelling company purpose and guiding principles for the combined companies

3 Build high trust in your integrated companies

4 Decide your bold, motivating goals for your integrated companies

5 Create your powerful FastGrowth Plan for your combined companies

6 Build your powerful belief about your company goals and growth Plan

7 Develop your winning attitude towards growth

B. Achieve strong commitment

1 Successfully present your FastGrowth plan to all your staff

2 Involve your people in your company purpose, goals and growth Plan

3 Develop your strategic and inspiring leadership

4 Organise the merged companies for growth

5 Promote and recruit the right people for your senior team

6 Clarify your team’s roles

7 Build your balanced, effective teams

8 Build your engaged and empowered teams

9 Coach your senior people in your integrated company

2 GAIN PROFITABLE SALES & RETAIN YOUR IDEAL CUSTOMERS

A. Gain profitable sales

1 Re-sharpen your market focus

2 Decide your special niche for growth

3 Define your compelling business proposition for your merged companies

4 Develop your successful new products & services

5 Integrate your brands, content and online presence

6 Generate potential customers

7 Filter in your high-probability customers

8 Gain your ideal customers

9 Develop & roll out your cross-selling plan

B Retain your ideal customers

1 Achieve your optimal selling prices

2 Significantly increase your brand value

3 Negotiate good deals for growth

4 Create your WOW business

5 Manage relationships with your customers

6 Increase your lifetime customers

7 Gain your valuable referrals

8 Build your successful online business

3 INCREASE YOUR PROFIT AND ENHANCE THE PROFIT MULTIPLIER

A. Increase profit

1 Achieve a lower break-even in your combined companies

2 Develop a stronger business model for growth

3 Streamline your business processes across your companies

4 Keep your company integration on track through effective indicators

B. Enhance the profit multiplier

1 Create, protect and commercialise your intellectual property

2 Grow your business nationally or internationally

3 Get your products or services into big, growing markets

Write each of your six priorities on small post-its and then place these in your Integration Plan on page 8.

Sixthly the peer-to-peer advisory board help you create your integration plan and scope your key, priority integration project.

Scope your key, priority integration project

THE TITLE OF YOUR KEY, PRIORITY INTEGRATION PROJECT (3 words):

•

Your project manager:

•

Proposed start date:

•

Forecast finish date:

•

1 Define your SMART goal for your project:

(Specific, Measurable, Achievable, Realistic, Timebound)

•

2 Identify your project constraints:

•

•

3 Decide your budget:

• Days effort

• Money

4. Nominate your project team (who?):

•

5. Analyse the risks:

•

•

6. Assess the likely financial benefits for your company:

• On your sales?

•

• On your operating profit?

•

Produce a Gantt Chart for your key, priority integration project

To implement your acquisition process and integration plan, what are your next actions?

•

To engage your people in the relevant parts of the acquisition process and integration plan, what are your next actions?

•

Lastly the peer-to-peer advisory board help you take massive bold action.

The profound impact on you and your company of acquiring and integrating other companies for growth is that you will enjoy remarkable profit growth from your buy and build plan.