By Tom Schramski, PhD

Volume 1 Issue 5, April 1, 2014

Our emphasis is typically on the concerns of people trying to build sustainable value in their organization for an eventual transaction. In most cases, they are anticipating their exit and want to maximize their ultimate sales price.

Additionally, we also encounter entrepreneurs who are trying to enhance their value through acquisition. Whether it is the purchase of a small therapy practice, a homecare/hospice company, or a large regional disabilities organization, they are looking to draw on this acquisition as a platform for future success.

To increase the chances of a positive outcome, great buyers abide by the following principles:

• Before even considering an acquisition, great buyers know their strategy – the framework that guides their choices and determines their organizational direction.

• Great buyers measure the acquisition opportunity in terms of their strategy, not the other way around. They may flirt with an attractive or unaligned possibility, but they are not ultimately seduced by it.

• Great buyers pre-qualify themselves financially and live within their limits as they seek acquisition opportunities.

• They have a clear understanding of the typical steps in the transactional process and are able to convey this to potential sellers, especially owners that may lack their sophistication. This is often a critical part of forming a foundation for trust in an evolving relationship.

• Successful buyers appreciate the seller’s perspective even when there is a difference of opinion about valuation and other related matters. They understand that it may be preferable to walk away from a possible transaction rather than trying to hammer the seller into submission.

• They anticipate tactical problems that inevitably occur in any transaction and work with the seller to jointly address the issues when possible.

• Great buyers plan for the implementation and integration of the acquired entity in advance of closing. By doing so they increase the opportunity to address any issue as part of the transaction, not as an afterthought or just a problem for someone else to manage.

These principles are common sense and can have significant impact on how the acquisition is measured over time. Great buyers understand this and also understand that their good reputation can improve their chances for attracting great opportunities in the future.