Chris Evans

21st April 2021


How to avoid common acquisition mistakes

If you’re thinking about an acquisition sometime in the future, there’s no better time than the present to start planning about your approach. The key to buying another company is to do your homework, assess every possible option and build yourself a credible shopping list. So many people don’t follow those basic principles and, ultimately, their acquisitions fail to deliver the expected returns.

Shortlist the right companies

First things first – you need to start with a list of companies of interest. But where to begin? You might have recommendations from a whole host of people, but how do you know which options are viable? While these recommendations might turn out to be excellent, the company in question must be thoroughly vetted, analysed and compared to other options in the market.

 Plimsoll can help you to compare the performance and long-term prospects of every potential acquisition in your market. With a few basic criteria, a pool of thousands of options can be narrowed to 10 or 20 in just minutes. Instead of spending months researching, we can help focus your efforts to a viable shortlist of companies faster.

Benchmark your target acquisitions against peers

Once you have your shortlist, you can start looking at the details of each business. Of course, you will want to compare each of your targets against each other, but depending on the profile of your acquisition criteria it may be advisable to benchmark your targets against other industry peers. Understanding the long-term financial health of any company you are interested in buying before the transaction is critical.

Are your targets distressed or well-managed? By comparing sales growth, profit margins, and productivity metrics you can start to assess how each business might benefit your existing operation. You can always look at businesses that may not even be for sale, being mindful to stop and look for unseen opportunities. Plimsoll provides the tools to find those that meet your criteria and the hot prospects you might otherwise miss.

Assess cultural and strategic fit

Acquiring a company is more than just a financial decision. Other important factors that can play into the success or failure of a transaction involve people and processes. Strategically speaking, does the acquisition provide you access to new markets or reduce your dependency on suppliers? Will potential growth be immediate, or could your investment take some time to pay off?

You’ll also likely be taking on a new team, one with its own legacy and ways of working. If this is dramatically different from the culture in your current business, it’s worth considering the impact this could have on a smooth transition.

Pay the right price

There is always a touch of secrecy surrounding the ultimate cost of acquisition. The critical thing is to have a starting price for negotiations. A seller will want top dollar so it is important to have a value on any target and a benchmark of alternative purchase options. Much like buying a home, you must be prepared to move onto other options if the price is not right.

 Always have a price in mind before entering negotiations. The Plimsoll Analysis includes a current valuation based on the latest on every company in a given market.

If you’re looking to grow your business through acquisition, Plimsoll can help reduce the search and identification process of finding acquisition targets from months to mere minutes. We offer a range of services and products that are designed to help business leaders to quickly narrow millions of potential options in varied markets, sectors and even countries into the handful that you could realistically consider.

 We have thousands of industry-specific studies to let you filter down the companies that meet your criteria or we have our Acquisition Finder Service whereby we do all the hard work and present you with the 10-20 best possible targets. Just enter your criteria and we’ll help to get you started today: