How to Know When to Say Yes to Acquisition…

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Timing is Key

The acquisition decision is a huge one for most entrepreneurs, but if you play your cards right and are on top of your industry’s financial standing, it doesn’t have to be difficult to navigate. Whether you’re worried about control of your business, its future success or any other what-ifs before you sign the dotted line, timing is everything when contemplating an acquisition.

 

“The time to contemplate an acquisition for a tech company is when the founders realize that to get it to the next level it should be part of something bigger,” explains Jim Moore, Managing Partner, J. Moore Partners, a company that specializes in mergers & acquisitions for technology companies.

 

M&A announcements have been aplenty as of late, and with good reason. With consumer trends constantly evolving and dozens of competing companies popping up across industries, sometimes merging with a key competitor is a sensible solution for a small business. From tech companies to airlines and beyond, mergers are hitting the wire full speed ahead as market conditions change across industries

 

Shift Gears

According to Moore, another reason to contemplate an acquisition is when the market starts to make a shift. Whether the shift is positive or negative for your particular company matters, but the bigger reality is that change in the market may affect either your company’s position, or your company’s future.

 

"This shift could be driven by a large player buying a competitor, a well-funded new player coming in, or if there is a major new technology requirement that would be hard to adapt to quickly," explains Moore.

 

The same goes for non-tech companies. Any disruption to your industry or overall decrease in growth in the market could hinder your chances of successful acquisition.

 

Stay Relevant

Financial Advisor magazine writer Philip Palaveev uses a fitting description of mergers and says they’re “a lot like weddings.” You can get his full take on navigating a merger but, in a nutshell, Palaveev offers four useful tips for negotiating a merger:

  • Establishing a vision;
  • Getting to know your new business partner;
  • Attention to detail; and
  • Determining the financial and legal structure

But, most importantly, entrepreneurs should be focusing on staying relevantdespite the terms of an acquisition. Relevance is the key to making an acquisition successful if you want to remain an active voice in your business and maintain its original identity. Use the tips above to get started, and you can anticipate what’s to come and control the deal to ensure you and your staff are as relevant tomorrow as you are today.

 

As Moore notes, “The big platform players are using M&A to keep up and acquire talent and fresh intellectual property” as markets are continuously changing at rapid speeds. The ability to stay relevant will depend on how much talent and IP you hold and your position on the growth curve in your industry market—the “sweet spot” of the growth curve, when it’s at its peak, is the best time to sell, according to Moore. Once you pinpoint that moment for your company, you’ll be on your way to planning your next steps.

 

Your Turn: Has your company recently been acquired? Tell us about your experience and your M&A lessons in the comments below…

 

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