This 1-day, in-house, training course covers all aspects of an acquisition process from initial strategies for expansion through to planning, due diligence, negotiation, execution and the preparations for a successful integration.
The major risks and problems likely to be encountered by professional advisers, principals and entrepreneurs are highlighted with guidance for their avoidance or mitigation. Process and commercial failures are examined and the necessity for a sound acquisition plan is emphasised.
How to Make a Successful Acquisition
- Reasons for Acquisitions – horizontal, vertical, diversification, synergies, asset stripping
- Why Acquisitions Fail – reasons for failure, mistakes to be avoided
- Process and Commercial Errors – why do they do it?, the strength to “walk away”
- Planning for Success – devising tactics, understanding the control premium
Formulating the Strategy
- Acquisition Criteria – industry, size, location, products/services, hurdle rate of return
- Searching for Growth – identifying suitable targets, unusual sources of information
- Alternative Strategies – organic growth, minority, franchising, licensing, joint venture
- The Acquisition Plan – deal size, affordability, target industry, risk tolerance
- Preparing the Management – management role before and after, cultural issues
- Measuring the Risk – operating risk, risk of over-paying, risk of over-gearing
- Locating and Screening the Targets – size of the target, synergies expected, price/value
- Assembling the Professionals – selection process, avoiding time-wasters and charlatans
- Approach Tactics – who, when, how, handling the first meeting, what happens next
Investigating the Target
- Commercial Due Diligence – kick the tyres, count the beans, look for skeletons
- Deciding on the Price – NAV, DCF, PER, comparisons, hockey-stick projections
- Further Due Diligence – demand determinants, competition, barriers to entry, sensitivities
- Evaluating the Synergies – revenue enhancements, cost reductions, bolt-ons
Negotiating the Deal
- Selecting the Negotiating Team – establish individual roles
- Establishing Clear Objectives – bottom Line, give-aways, resolving an impasse
- Representations, Warranties & Indemnities – what they are, what they do
- Earn-outs – how much up front, reasons to delay payment of the consideration
Planning the Integration
- A Merger of Equals? – a dangerous concept, clarify roles, eliminate rivalries
- Handling Staff and Political Problems – prioritise issues, review service agreements
- Effective External Communication – bankers, press, customers, suppliers
- Implementing Decisions – use of an integration manager, implement best practice
- Avoiding Disintegration – lead from the front, secure and incentivise key personnel
Course Notes, Slides and Exercises
Participants will receive a booklet containing copies of 13 slides and 68 pages of very comprehensive notes. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.
During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.
You consider the financing sources open to a fast growing chain of coffee shops. The owner does not wish to float the company as too much equity would be given away at this early stage of its development. Consequently, he asks you to consider other methods to raise the required finance.
You are instructed to find a buyer for a prosperous third generation family owned furniture manufacturing company. Before commencing a formal search, you are asked to value the company on the basis of its: (i) assets; (ii) anticipated cash flows; and (iii) earnings.