Over 90% of respondents to respondents to KPMG M&A survey for 2016 said they plan to make at least one acquisition in 2016. 81% of the 550 respondents felt they would be doing two or more acquisitions. How do you find the best acquisitions in this competitive M&A market? This is the tenth year of their study and their reports are well worth reading. You can get KPMG’s report US Executives on M&A: Full Speed Ahead in 2016 This is a great resource a client shared with me that I wanted to share with you.
The question I have is how successful will these acquisitions be? Another survey shows 70% of the executives that have completed acquisitions believe they did not receive the value they expected from their deals. I’m not sure how you feel about the deals you’ve done, but it’s critical for entrepreneurs to be successful in the deals they make. A bad deal can impact a larger organization negatively. A bad deal in a middle market business may kill your organization.
Over the years, many of the entrepreneurs and founders I spoke with felt acquisitions may be as difficult as starting their organizations. In this year’s KPMG study, over 60% of larger organizations’ acquisitions executives felt they would initiate three or more deals in 2016. So how does midmarket entrepreneur compete with their larger competitors?
My professional experience tells me successful entrepreneurs and midmarket companies can positively compete by better understanding how acquisitions fit into their overall growth strategy. They can invest more time in understanding why and what they are looking for in the companies they acquire.
The first strategy for entrepreneurs is they should become more focused on the softer parts side of the business they buy. This is where the gold is hidden for many high growth organizations. The gems don’t always appear on the acquired organization’s balance sheet. To retain the value of the organization you’re buying, you must work hard to protect these key assets.
Also, many organizations tend to look at only businesses that are currently available. I do not believe this is the executives’ fault. It’s because they face significant competition from other organizations for the best businesses. You do not want to be the person who missed the next great company. Having been in that position at least once or twice in my career, it can be a very painful meeting.
Learning how to uncover companies who have not yet decided to sell is an art and science of being successful in making your acquisitions. We will share several ideas on how to do this in a future blog. You will find it as amazing as I did when I first learned about it in 1986. It’s constantly evolving but this process can make you more successful at making acquisitions than you might believe possible today.
Since many of my clients are midmarket organizations they do not typically initiate more than one or two deals every year. This means they don’t have a team of professionals committed to making acquisitions. To be successful at making acquisitions in today’s competitive M&A market, you must find a different way to succeed. This shouldn’t surprise you. This is how you beat your larger competitors on a regular basis and win today.
Over the next several weeks I will share what I’ve learned about midmarket M&A that help you grow your business in the 2016!
Next week we discuss how to get the most out of the money you invest in growing through acquisitions. See you here next week