The decision to acquire a business involves a strategic framework, focussed planning, targeted due diligence and key goals for the integration of the target. Acquisition planning helps focus the organisation on focussing on what is important to maximising a successful purchase, and TCTM can assist an organisation to approach an acquisition strategically and execute it with focus and structure.
The acquisition planning process seeks to cover the following questions:
- How does the acquisition fit into, or modify the Group strategy. Are we clear on why we want to acquire the business and what we hope to achieve with it
- How will the transaction impact on the competitive positioning within the industry if we buy it? What if we don’t and a competitor does?
- Do we understand what the seller’s desired outcomes are, including form of consideration, taxation implications and any ongoing day to day involvement in the business
- Do we have an initial sense of the value of the target which includes:
- A standalone assessment of the target
- Value implications of new initiatives and opportunities not reflected in current financial performance
- Separate value assessment of potential synergies, with risks/interdependencies/pay off assessments and risk adjusted discount rates
- Separate value assessment of potential strategic benefits, again using risk adjusted discount rates
- A clear documentation of key assumptions and hypotheses (that will be tested during due diligence)
- Do we understand how the potential purchase will impact other stakeholders such as new and existing employees, customers and suppliers
- What internal and external support will be needed to conduct due diligence and then integrate the business
- Is there potential for redefining systems and processes for the Group and its retained businesses (post the sale)
- Establishing team and communication protocols, project management, reporting and timetable
- Preparations for due diligence, including team, internal/external support, reporting, materiality, initial risk and opportunity assessments and structure
- Preparations for integration, including straw man approach
Where a target business is being separated from a Group, an initial assessment of the following separation implications is conducted:
- Ownership of assets
- Staff transfer
- Taxation
- Transition service arrangements
- Ongoing service and other agreements (such as leasing of premises, ongoing customer/supplier relationships between the buyer and seller)
This service will help aim to see that an acquisition is approached in a strategic manner, with clearly communicated objectives and goals as well as a road map to execute the purchase.