Organizational senior leadership must articulate a clear strategic rationale and the benefits derived from an acquisition. Small and start-up business are particularly challenged to create these professional business plans to meet the need of diverse and demanding groups of stakeholders. Identification of target investors, superior actionable market strategies, realistic financial models, combined company synergies, cost of culture acclimation, and strategic vision are essential elements of the business plan.
Components - Small Business Plans
Identifying actionable strategies supported by meaningful data is the cornerstone of an effective business plan. The utility of the plan is in the articulation and execution of its strategy. Components of business plans focused on growth through acquisition are:
- Executive summary - Tightly worded discussion that centers around current business situations and prospective acquisition. Acquisition discussion encompasses markets, products, sales channels, potential synergies, cost savings, price opportunities, risks, operational issues, and financial impact. Alternate organic strategies should also be communicated.
- Individual sections focus on complementary, redundant, or strategic gaps, including: market positions; product portfolios; sales channels; overhead; operations; brands, and human capital.
- Detailed realistic financial projections.
Effective action plans driving outcomes for each of these sections need to convey focused, data driven statements.
Characteristics - Professional Business Acquisition Strategies
Each component section of the business plan is driven by common characteristics of success. The successful integration of a strategic acquisition is dependent on identifying synergies, financial capital impact, and risk vs reward. A strategic business plan needs to be developed for the current business in order to assess the impact of an acquisition.
Identifying synergies focuses on the prime rationale for that acquisition. Development of these synergies through fact based data analysis requires answering penetrating questions. These questions are particularly important for small businesses and include:
- Do the combined organizations fill a critical product gap?
- What is the cost of filling that product gap through new development vs acquisition?
- Do the combined companies open new market channels for existing products?
- Do the integrated companies gain geography or an international presence?
Risks vs rewards inherent in an acquisition must be honestly and objectively assessed. Questions that need to be answered include:
- What are the business cultures and how can they be integrated?
- What are the best practices of the combined companies and how will these be assessed?
- How will the rationale of leadership, people, and facilities be handled?
- What are the potential cost savings?
- What are the market share gains?
- What are the risks of intellectual property loss and key customer losses?
- What is the impact upon the sales forces?
- What is the real financial cost of this transaction?
Balance these answers against the systematic risk involved. Most small businesses over-estimate the benefits and understate the integration risk. These strategies need to be objective, data driven and realistic to develop an effective business plan. The financial acquisition model developed must be honest and objective in its assessment.
Assistance - Developing Acquisition Business Plans
Advice for developing business plans is readily available. Libraries and bookstores abound with resources. Many local colleges offer courses with government grants potentially available.The leadership team's need for assistance is dependent on the complexity of the acquisition transaction, the investment capital required, and potential investor makeup. Consulting firms focused on guiding company leadership through the process, such as Bizplanit, offer professional templates and advice on accessing capital markets. The organization's leadership should weigh the cost of professional assistance on a case by case basis.
Growth through acquisition is not a panacea for all organizations. Tough questions regarding culture, customer, brand, and human capital integration require answers. This analysis forms the basis for the acquisition integration strategic plan. The plan should be actionable, measurable, and be accountable for delivery of the identified synergies.
David Zietlow - Dave Zietlow is an experienced senior executive with global general management success in multi site environments. He invigorated ...
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