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Successful Acquisitions

Book Description

Every company faces the inevitable challenge: stagnate or grow. One of the fastest ways for small- and mid-size companies to expand is through acquisition. Purchasing another company can seem daunting—but when done right, it can deliver outstanding rewards. Successful Acquisitions supplies the key information that business leaders need to know about finding and buying companies. Written by an M&A expert with more than $1 billion in transactions under his belt, the book’s practical and comprehensive approach integrates all the moving pieces into a logical step-by-step process that covers: • The art and science of researching companies • Building and balancing an acquisition team • Valuation tips that look beyond the obvious • The importance of “the seller’s equation” • Developing a negotiation platform • How to be tough and still protect the buyer-seller relationship • Guidelines for structuring an airtight deal • The letter of intent, due diligence, purchase agreement, funding, and other essentials • Bringing the deal to a timely close • A 100-day plan for making integration a success It’s all here. From building the foundation to growing the relationships to cementing the deal, Successful Acquisitions is a complete roadmap to buying companies and achieving proactive strategic growth.

Table of Contents

  1. Cover
  2. Title
  3. Copyright
  4. Contents
  5. Introduction: From Beginning to Beginning
    1. WHY THIS BOOK IS NEEDED
    2. FROM BEGINNING TO BEGINNING
    3. THE HIDDEN OPPORTUNITY
    4. THE OLD WAY AND THE NEW WAY
    5. IT’S NOT A USED CAR
    6. THE SELLER’S EQUATION
    7. SYSTEM BREEDS SUCCESS
  6. Part 1: Build the Foundations
    1. Chapter 1: Know Thyself
      1. THE SEVEN STRATEGIC QUESTIONS
      2. 8220;What Business Are We In?”
      3. 8220;What Is Our Core Competency?”
      4. 8220;What Are We Not?”
      5. 8220;Where Is Our Pain?”
      6. 8220;What Are Our Dreams?”
      7. 8220;What Is Our Risk Tolerance?”
      8. 8220;What Is Our Company DNA?”
      9. CAUTIONARY TALES
    2. Chapter 2: Pathways to Growth
      1. GROWTH AS A TOOL FOR CALIBRATION
      2. THE “FIVE FORCES” MODEL OF COMPANY GROWTH
      3. THE FIVE PATHWAYS TO GROWTH
      4. Grow Organically
      5. Exit the Market
      6. Be the Low-Cost Provider
      7. Do Nothing
      8. Pursue External Growth
      9. THE NINE PATHWAYS OF EXTERNAL GROWTH
      10. Strategic Alliance
      11. Joint Venture
      12. Licensing
      13. Toll Manufacturing
      14. Greenfielding
      15. Franchising
      16. Import/Export
      17. Minority Interest
      18. Acquisition
    3. Chapter 3: Prepare to Buy
      1. THE TEN MOST COMMON REASONS TO ACQUIRE
      2. DETERMINING THE MISSING PIECE OF THE BUSINESS PUZZLE
      3. HAVE ONE REASON TO BUY
      4. PREPARING TO SEARCH
      5. PURSUING THE NOT-FOR-SALE ADVANTAGE
      6. DEVELOPING FUNDAMENTAL CRITERIA FOR FILTERING PROSPECTS
      7. SELECTING MARKETS FIRST
      8. COMMITTING TO RESEARCH
      9. HOW LONG WILL IT TAKE?
    4. Chapter 4: Assembling Your A-Team
      1. ACQUISITION IS A COLLABORATIVE EFFORT
      2. ASSESSING IN-HOUSE RESOURCES
      3. BUILDING THE INTERNAL TEAM
      4. TEAM DYNAMICS: AN UNUSUAL MANAGEMENT CHALLENGE
      5. SKEPTICS AND OPTIMISTS
      6. THE ACQUISITION COORDINATOR AS CHAMPION
      7. BUILDING THE EXTERNAL TEAM
      8. DO YOU NEED A THIRD-PARTY ADVISER?
      9. LET THE SEARCH BEGIN
    5. Chapter 5: Researching and Selecting a Market
      1. GUIDING PRINCIPLES
      2. THE OPPORTUNITY MATRIX
      3. BUILDING YOUR CRITERIA
      4. COMMON CRITERIA
      5. Market Size and Segmentation
      6. Market Growth Rate
      7. Major Players
      8. Customer Profile
      9. Other Criteria
      10. THE MARKET CRITERIA MATRIX
      11. CONDUCTING EFFECTIVE RESEARCH
      12. ENGAGING A THIRD PARTY TO CONDUCT RESEARCH
      13. SHIFTING FOCUS FROM MARKETS TO PROSPECTS
      14. PREPARING FOR THE NEXT STAGE
  7. Part 2: Build the Relationships
    1. Chapter 6: The Prospect Funnel
      1. WHY A FUNNEL?
      2. ESTABLISHING PROSPECT CRITERIA
      3. THE VALUE OF OBJECTIVITY
      4. DETERMINING THE COMPANY DNA
      5. CASTING A WIDE NET
      6. GATHERING SECONDARY RESEARCH
      7. CONDUCTING PRIMARY RESEARCH: THE INFORMATION DANCE
      8. TOOLS THAT ORGANIZE AND PRIORITIZE
      9. EARLY DUE DILIGENCE
    2. Chapter 7: Making the First Contact
      1. SOME CRITICAL CONSIDERATIONS
      2. CONTACT STRATEGY
      3. BUYER PSYCHOLOGY 101
      4. THE OWNER’S HOT BUTTONS
      5. THE ART OF THE PHONE
      6. The Call Structure
      7. LEARN TO LOVE “NO”
      8. FROM COURTING TO DATING
    3. Chapter 8: Face-to-Face with Opportunity
      1. BEFORE YOU GO
      2. BE THEIR GUEST
      3. PLANNING THE OUTCOME
      4. MEETING THE PROSPECT
      5. HOSTING THE SECOND MEETING
      6. CONTINUING THE COURTSHIP
    4. Chapter 9: First Assessments
      1. EVALUATION VS. VALUATION
      2. EVALUATION: DATA VS. INTUITION
      3. VALUATION: AN ART, NOT A SCIENCE
      4. VALUE VS. PRICE
      5. CONVENTIONAL VALUATION
      6. THE BUYER’S EQUATION
      7. THE MULTIDIMENSIONAL APPROACH TO VALUATION
      8. Method 1: Discounted Cash Flow
      9. Method 2: Liquidation Value
      10. Method 3: Completed Transaction Comparables
      11. RULES OF THUMB
      12. ON TO DEEPER NEGOTIATION
    5. Chapter 10: Negotiating with Prospects
      1. BUILDING YOUR NEGOTIATION PLATFORM
      2. BE TOUGH AND PROTECT THE RELATIONSHIP
      3. MAKING THE SELLER COMFORTABLE
      4. TERMS, TIMING, AND TALENT
      5. SMART BARGAINING
      6. BROACHING THE PRICE ISSUE
      7. AVOIDING CIRCLES
      8. YOUR ADVISER’S ROLE
      9. PREPARING FOR THE ENDGAME
  8. Part 3: Build the Deal
    1. Chapter 11: The LOI: A Gentleman’s Agreement
      1. A KEY MILESTONE
      2. THE PRE-LOI PRESENTATION
      3. THE OPENING PARAGRAPHS
      4. A NARROW PRICE RANGE
      5. BUYING WHAT YOU THINK YOU’RE BUYING
      6. STOCK DEAL VS. ASSET DEAL
      7. BINDING TERMS AND CONFIDENTIALITY
      8. TIMETABLE UNTIL CLOSING
      9. NO-SHOP VS. GO-SHOP
      10. ALWAYS, SOMETIMES, NEVER
      11. Always
      12. Sometimes
      13. Never
      14. THE LOI SIGNATURE: A MILESTONE
    2. Chapter 12: Getting Down to Business
      1. DUE DILIGENCE: CONVENTIONAL THINKING VS. NEW THINKING
      2. The Three Buckets of Critical Information
      3. Who Does Due Diligence?
      4. Extracting the Best Information
      5. Negotiating the Red Bucket Items
      6. Financial Due Diligence
      7. What to Do with the Lawyers
      8. FINAL VALUATION
      9. DRAFTING THE DEAL STRUCTURE DOCUMENT AND PURCHASE AGREEMENT
      10. CLOSING THE DEAL
    3. Chapter 13: Integration: An End and a New Beginning
      1. THE SECRET TO INTEGRATION SUCCESS
      2. How Much Should You Integrate?
      3. Reverse Integration
      4. The 100-Day Plan
      5. It’s Not About More Communication
      6. CULTURAL INTEGRATION
      7. BRAND INTEGRATION
      8. SECONDMENT: EMBEDDED INTERPRETERS
      9. READY TO BUY AGAIN
  9. Executive Summary: The Top Ten Lessons
  10. Glossary
  11. Resources
  12. Appendix: Sample Letter of Intent
  13. Index