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Mergers & Acquisitions
As technologies mature and high rates of growth become more difficult to
achieve, many companies include acquisitions as part of their strategies to
maintain growth, augment their product lines, obtain new technologies, and
remain vital. SMG has found that
even companies that are not commonly considered large enough to undertake acquisitions
can gain significant value through purchasing closely related businesses.
It is extremely important
to understand how the acquisition fits with the
company’s business strategy and what specific benefits are being sought. Understanding this fit will also help a company
field unsolicited requests from other companies seeking to be bought, through screening criteria
that will quickly separate
those with
high potential from the rest.
The goal in any
acquisition is to obtain more value than the purchase price.
By understanding their main assets, acquirers
will be able to extend, augment, or add new capabilities to enhance their market, technical, financial, and competitive positions.
SMG's Experience with Mergers &
Acquisitions
SMG has
been involved in all phases of the acquisition process including developing
the business strategy, determining the goals for the acquisition, identifying
and screening opportunities, conducting due diligence, and assisting with
post-acquisition revenue achievement.
From
this experience, we have learned that a well-organized and disciplined process
is essential to undertaking and concluding acquisitions that achieve a
company’s goals. Too often companies respond in ad hoc ways to opportunities
and
shortchange the good planning and investigative processes. SMG brings a
disciplined and ordered approach to identifying, qualifying, and evaluating
acquisitions, remains objective and data driven, and adheres to the
company’s strategic goals throughout the work.
Examples
of our Mergers and Acquisitions experience include:
Enterprise
Software Company:
SMG
was asked to assess the market’s interest in new products resulting from the
purchase of a smaller and less well-known software vendor.
Working with the client to develop a target list of contacts, SMG
conducted telephone interviews to determine the nature and extent of the
acquiring company’s “brand” and its ability to generate sales. This information had
direct impact on the value of the acquisition and the expectations and
planning for its integration into the parent company.
Retail Back Office Software Company:
Our
client had already identified and was beginning negotiations with its target
acquisition. We were asked to determine the ongoing business potential of
the acquisition, analyze its cash requirements, and validate the forecast
provided by the target company. The
strategy driving the acquisition was to gain access to new technology, but the
client did not want to be constrained by an operating cash drain.
SMG rescaled the business’ revenue potential and identified the
areas for expense management that were necessary to avoid significant cash
requirements.
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