Review from the Summit: Should You Acquire or Be Acquired? (Part 2)

Now I am going to continue to summarize Hobson Hogan’s presentation on whether you should consider being acquired or whether you should acquire another company from Day 1 of the Summit. If you have not read part 1 please do so first.

Let’s pick it up with your selling/liquidity options:

  • Majority/controlling interest sale: To competitor or investment firm/private buyer
  • Internal sales/transfers to next generation of management: Multi-year S-Corporation/LLC sale programs, management buyouts
  • ESOP (Employee Stock Ownership Plan)
  • Selling significant minority stakes with eventual control sale: Can solve difficult situations where buy-sell agreement undervalues firm, gives owner a ready buyer in cases of illness or death, transaction(s) completed at a discount

Next he discussed the key points to consider before making a corporate acquisition:

  • All starts with strong business plan and big dose of humility
  • Be honest about risks – most are related to executive hubris not quantitative failures of the CFO
  • Plan early and implement slowly
  • Maintain a strong balance sheet
  • Manage assumed liabilities
  • Manage risk as well as return
  • Keep your hand in project selection/pricing
  • Manage personal guarantees
  • Just because you can borrow money does not mean you should
  • Acquisitions should enhance or implement new strategy
  • Acquisitions for acquisition sake will only distract management from its most important activities
  • Acquisitions should support your marketing plan, enhance strengths, mitigate weaknesses, reduce threats

Before you jump into the acquisition plan you need to work on the business plan – and this entails:

  • SWOT analysis
  • Market strategies
  • Product/service strategies
  • Operational plans
  • Management succession plans
  • Financial projections
  • Operating budget
  • Projected earnings
  • Cash flow and CAPEX budget

In the next posting I will finish the summary of Hobson Hogan’s presentation.

One of the primary takeaways from your most recent visit to our company was that the words, promises, and tone of our call center reps need to speak directly to the prospect’s needs, followed by a professional, systematic sales presentation which builds immediate rapport and trust.

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