Foundational elements of a successful business acquisition

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In business, there are many ways to grow. At Zeifmans, we’ve spent nearly 60 years assisting our clients in gaining market share and strengthening their business portfolios. We have decades of experience guiding small to mid-sized businesses as they implement our innovative strategies for growth- including countless business acquisition scenarios that have led to notable financial gain.

Though our team has witnessed numerous acquisition success stories, studies conducted by the Harvard Business Review reveal that more than 60% of acquisitions end in failure[1]. The fact is that while acquiring a business is an appealing and potentially very lucrative growth strategy, it’s not without risk.

HBR has found that in almost every case, acquisition failures can be traced back to “insufficient discipline” in the evaluation process. It’s easy to see how an entrepreneur can get wrapped up in the allure of a buying frenzy; in the adrenaline rush of swallowing up a competitor, or purchasing an impressive empire along with its bragging rights, the true business value may become obscured. And in the case of new and emerging markets like Cannabis or esports, nascent industry standards make accurate valuation much trickier.

When thinking about acquiring a new company, it’s beneficial to consider how the newly acquired asset will contribute to your company legacy. What benefit will it provide to your existing customers? How will it affect your current employees? Seek acquisitions that add value beyond the enhancement of market share. Your legacy will be determined by how well you understand your customers, and how respectful you are of your stakeholders- both internal and external alike. Thus, it pays off to conduct thorough financial evaluations, and to choose wisely.

Sound like a lot of pressure? In many ways, it is. But that doesn’t mean that it can’t be an enjoyable process. With the assistance of a trusted business advisor who is well-versed in diligence activity, you can set your organization up for reliable success that has the potential to yield big results for years to come…

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[1] Harvard Business Review, “So Many M&A Deals Fail Because Companies Overlook this Simple Strategy”, https://hbr.org/2016/05/so-many-ma-deals-fail-because-companies-overlook-this-simple-strategy

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