Evaluating a Target Company
Evaluating and Wooing the Target
Having identified a target or made a shortlist, the acquiring company will have to woo the target if it is not actively considering disposal. It is important to establish a process for monitoring changes in the situation of the target company: these could include a change in market position, management change or the entry of an aggressive competitor into the market-place. Being well-informed may make all the difference between a successful or unsuccessful acquisition.
Checklist For Evaluating Target Companies
Ascertain the real reason for sale if the company is up for sale.
Determine whether the company has been dressed up for sale.
Find out as much about the business prior to negotiation as possible.
Spend time and money on market intelligence.
Attempt to quantify hard and soft synergies.
Regular progress meetings should be scheduled during the wooing stage. Communication is essential to build up trust between the parties and to develop a mutual understanding of each otheršs businesses. Logic supported by analysis is essential to convince targets of the advantages of selling. During a protracted process of negotiation it is sometimes easy for corporate attention to wander: it is therefore advisable to keep the process alive and active and maintain high interest levels.
Some caveats and hints continued in subscribers section
and other headings in the report
Approaching the target and negotiating
The importance of research
Planning an approach
Dealing with the vendor Professionals