Mergers and Acquisitions--Renaissance consultants

Growth through a Planned Acquisition Program

Mergers and Acquisitions

As management consultants assisting companies to grow by mergers and acquisitions, Renaissance's pride itself in helping companies successfully grow by the buying of companies including re-engineering the acquired company. The services offered by Renaissance's seasoned management consultants are comprehensive and complete, ranging from searching out suitable targets, negotiating terms and conditions, integrating the acquisition, and re-engineering the acquired company. Renaissance consultants' skill in avoiding the problems and pitfalls that so many acquisitions and mergers encounter is due to their senior level, hands-on experience in 50 different industries.

Current Acquisition Opportunity

A properly planned and executed acquisition program (whether involving one or a series of acquisitions) is often the fastest, most productive, and least costly method for a successful company to accelerate its' growth and profits.

Such planned acquisition strategy offers a special opportunity in today's economy. Many small to mid-size companies have been unable to adjust to the competitive pressures caused by corporate restructurings and increasing globalization of markets--and are available for acquisition at below normal valuations.

Problems to Avoid

Why then do so many acquisitions prove disappointing to the acquirer? There are two basic reasons:

Most acquisitions happen by accident, not by plan, leading to unanticipated problems, greater than necessary expense, and painful integration of the acquired company by the acquirer.
Existing managements rarely have the time or training to deal with the complexities of an acquisition, while engaged in the day-to-day running of their business.

Proper planning of an acquisition involves deciding on the type of acquisition, searching out the proper candidates, evaluating the synergy with the acquiring company, valuing the target company, creatively negotiating the purchase, and integrating the acquisition into the acquiring company's operations and corporate culture.

Type of Acquisition

The decision as to the type of acquisition will determine the ease or difficulty of finding a suitable candidate. Too often, existing managements narrowly restrict their search making it difficult, if not impossible, to find proper targets. Corporate synergy can take many forms. Companies that have successfully been in one business for many years generally need outside objective assistance to broaden their horizons and search.

Searching Out Suitable Targets

Most acquisitions happen by accident because an available company "happens" to come to the attention of the acquirer, who rarely looks elsewhere to see what may be available. A proper search generally will uncover a potential acquisition, which is a better fit and/or a better buy with significant difference to the acquirer's growth and profits.

Such searches should be undertaken with emphasis on evaluating the synergy with the acquiring company, including products, employees, markets, customers, suppliers, corporate culture, etc., and the cost savings and growth potential of the acquisition.

Valuing the Target Company

Valuation is not simply utilizing a mathematical formula. The value to the acquirer can be very different from the value of the takeover candidate as a stand alone company--and that difference can be negative or positive.

Whoever is valuing the target company must understand the operations of both companies sufficiently to evaluate the impact of the acquisition on the acquiring company's growth and profits in both the short and long terms.

Negotiating Terms

Negotiating the terms of an acquisition far transcends an analysis of the balance sheets and income statements of the prospective companies. "Chemistry" between principals cannot only assure the success of the acquisition, but can also be a vital determinant of the terms of the deal. If the owner/managers of the seller feel comfortable with becoming employees of the buyer, more favorable terms can usually be negotiated.

Furthermore, there are many creative methods of structuring an acquisition (partial payment based on performance, stretching out payments, etc.) which can help assure its success for the acquirer.

Most often, an experienced, knowledgeable intermediary can be much more effective than the acquirer himself in both "selling" the attributes of the acquirer and the benefits of becoming an integral part of the acquired company, and in negotiating the best possible terms.

Integrating the Acquisition

The most important, and often most difficult aspect of an acquisition, is effectively integrating the acquired company into the acquirer.

Organization, controls and corporate culture issues are only part of the answer to a successful acquisition. Key executives of the acquired company should be in roles commensurate with the contributions they make to the merged company. This, combined with clear goals and exacting procedures to achieve these goals, can help assure the success of the acquisition.

Is It Worth It?

Despite all the considerations and potential problems, growth by acquisition is most definitely worth the effort. With proper planning and expertise, it is the quickest and most effective method of growing a company and its' profits. Furthermore, once the first acquisition is successfully implemented, a company is positioned to accelerate its' growth through additional strategic acquisitions.

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Renaissance is a management consulting firm that specializes in implementation and adding value in short time frames for companies engaged in manufacturing, distribution and service.

Renaissance consultants are the publishers of the "NJ Directory of Select Service Firms and Organizations®."

Senior management expertise is available for assessment and implementation in the following:

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Business Positioning - preparation of business plans, growth strategies and acquisition plans. Also break even valuations for companies seeking additional capital; sales growth; growth by acquisition; to enter new markets; to be acquired; or to go public.