After The Acquisition – What Comes Next ?

The process of acquiring a business requires patience and tenacity as negotiations are worked through with the vendor, deal financing is put in place and the commercial, financial and legal due diligence check lists are worked through.

There are many “ moving parts “ to align when seeking to close an acquisition deal but in Churchillean terms I think that the date of closure on an acquisition might well be described as “ the end of the beginning “.

With the deal now done focus and attention must now turn to answering the question……….. “ so what comes next ? “.

My son is currently in the process of acquiring a business in the property services sector. Accordingly the “ so what comes next ? “ question will soon be one that he will need to seriously address assuming his success in closing his deal. What follows are outlines of points of guidance which I have given to my son in relation to the management and development of his acquisition post completion.

It will be appreciated that the various points are geared towards his proposed property services acquisition but I hope there may be something in the following that will be useful to anyone who is somewhere along the path towards their first acquisition.

Every business and every acquisition has its own unique aspects so it starts with “ hard thinking “ about various strategic issues which I suggest should be considered under the following broad headings :-

Sales and marketing
Financial and cash flow management
Operations and service delivery
Development of second tier management
Staff motivation, incentivisation and development
Integration of the acquisition with an existing business ( if appropriate )
Start with the end in mind – start planning your exit straight away

Expanding a little upon the above :-

Existing Client Base
I’d be thinking about the following :-

The handover period with the vendor must be planned wisely……….what is crucial to be learnt from the vendor during this period ?
On current clients and existing client base segmentation; perhaps the business’s current client base could be segmented into :-
Category A clients
Category B clients
Category C clients
The 80/20 rule will apply to some extent across the client base. The ROI on time and effort will likely be highest where focused on the “ As “ .

New Clients – High Quality Lead Generation and Referrals
Consider :-
How will new high quality client leads be generated ?
How to ensure a consistently high standard of service to merit a steady flow of client referrals ?

Exit Strategy
Have a target exit date.
Have a clear idea of who would be potential buyers of your business
Basically have a clear exit strategy in mind and work steadily towards its achievement from day one.

Financial Management
How will consistently tight financial management be implemented ?
Consider :-
On Profitability : Production of detailed profit and loss accounts on a monthly basis.
Actual results to be compared against forecasts.
Any adverse variances from forecast to be identified fast !!! – AND – remedial
action taken.
On Cash Flow : Cash flow must be tightly managed and especially so in the first year following deal completion.
I suggest forecasting forward on a weekly and monthly basis.
On Working Capital : The working capital cycle should be closely monitored on an ongoing basis in terms of :-
Efficiency of Trade Debtor collection
Time efficiency of moving projects commenced through work in progress to completion and
sales invoicing
The value and potential timing of jobs in the sales order book
Communications with clients to continuously “ feed “ the pipeline to the sales order book

Operations and the Service to be Offered
In terms of consistent standards of service delivery consider providing financial incentives to the workforce as a reward for :-
Completing all jobs on time and on budget
Achieving zero client complaints
In short, fully align the workforce with the business objectives set out in the business plan.

Strengths, Weaknesses, Opportunities and Threats
More hard thinking needs to be applied to the matters to be listed under the four SWOT Test headings.

On strengths and opportunities………… figure out the steps to be taken in order to capitalise upon them.
On weaknesses and threats………………. figure out the steps to be taken in order to counter them.

Just some brief thoughts, which I hope will be helpful. to you. If you’d like me to expand on anything please don’t hesitate to get in touch.

You can email me on jim@jwmbusinessadvice-accountancy.com or alternatively drop me a message on LinkedIn

Best regards, Jim