You have fallen in love with one of your competitors. How do you get in touch? What can you expect? What is possible?
Do your homework
In private, you may have fallen in love unexpectedly after that accidental meeting. You can also get those butterflies in your stomach for business reasons. However, be carefull before you start.
Why would you want to merge with another company at all? How does that fit into your company’s strategy, your personal plans as a director? Have you listed the pros and cons? Have you considered the consequences of such a step? Have you properly compared the business case with the option of continuing independently? Sometimes I speak to entrepreneurs who say they should go on a takeover path “it is eat or be eaten”. Oh really? There are sectors where this certainly applies. However, there are often all kinds of niches in which you can continue to run your business independently. Maybe even more profitable and with more autonomy.
Why do you want to partner with precisely that competitor? Do you know the company well? Have you looked carefully and broadly at all possible options? Don’t just be tempted by that accidental passer-by. Stop for a moment and compare the candidates based on objective criteria. Realize that no company is the same. In terms of positioning, people, culture, financial performance, size, etc.
The art of seduction
Now you have the ideal candidate in mind and you need to get in touch. Acting hastily rarely works to your advantage. Ideally, you always have your list of preferred candidates ready. You keep an eye on them and you have personal contact with some key-players regularity. And then, if the timing and circumstances are promising, you engage in a purposeful conversation. Sometimes you have the opportunity to come to a deal one on one with a owner. Most of the times, there is an open sales process with several candidates.
Suddenly it becomes complex and you enter unknown territory. Where fast and smart action is needed to avoid chasing the net. Make sure you know in advance which parties need to assist you in closing a deal. And be well informed about how an acquisition process works and what options for financing a takeover you have.
A takeover is not an everyday occurrence for most entrepreneurs. It is often an emotional and hectic process with moments of great enthusiasm and deep sighs. You quickly get to know each other and each other’s company. So take a step back from the process every now and then. Check for yourself whether this is indeed that dream candidate. And are you on the right track in the negotiations? Try to put yourself in the place of the other; what are the other’s motives for wanting this deal? Acquisitions are tailor-made and often more is possible than you think.
Making acquisitions is a strategically interesting, but risky step. You never get full insight in advance. You can never be sure how people will react when push comes to shove. Yet then the mutual go / no go moment comes. With all the uncertainties you take the plunge or decide to abandon it. Euphoria and heartbreak are close together.