Diligent acquisition
So you want to grow faster than the market rate and maybe you want to enter new markets or territories quickly. Acquisition is a tempting way to do this and it can highly effective. It can also be a massive drain on resources and increase the challenges faster than it adds to the profit line. Due diligence by operational professionals as well as the lawyers and accountants is the best way we know to maximise a successful outcome.
Traditional Mergers and Acquisition processes are dominated by lawyers and accountants. Most do a great job and often build fantastic models demonstrating opportunity, synergies and value. Few are still around when it comes down to delivering on these promises.
We know from first hand experience that these opportunities are often unrealistic or would involve huge, unplanned, costs in order to deliver them. Equally, opportunity is often overlooked.
Northlight Associates can get involved at three stages of the process:
Pre-acquisition targeting and target evaluation
So you’ve decided you want to acquire something or you’ve identified a specific target. Our structured approach, combined with the experience of our associates, can provide a clear and documented evaluation of the potential in a target; both the opportunities and the risks. Additionally we can provide realistic estimates of the timescales and costs to integrate the target into your current organisation.
Operational Due Diligence
The lawyers and accountants provide a vital range of diligence services which we aim to supplement not replace.
In addition to the contracts, covenants and bald numbers we can provide an evaluation of the state of the assets, the competencies of the current management and staff, the potential pitfalls from TUPE obligations where these are appropriate and the effect of integrating the business into your current organisation.
We can also begin the process of integration planning. Many traditional M&A specialist don’t start integration planning until the transaction is complete. In reality this is most often simply because they don’t have the skills to create the plan and their diligence investigations won’t have provided the necessary information anyway. Our view is that integration needs to start on day one following the completion of the transaction. This means the agreed plan needs to be available on day one.
Integration
Integrating an acquired business is anything but ‘business as usual’. If you’ve got the management capacity to do this, what on earth are your management doing for the rest of the time when you’re not buying businesses?
Successful integration is all about creating an effective plan and then executing that plan effectively. The plan must set out clear goals, responsibilities and timescales (We use a process called Goal Directed Project Management, but the name doesn't really matter). Managing the plan must balance between a single minded focus on the goals with a pragmatic flexibility to deal with the unexpected, which will inevitably arise along the way.
The Northlight Associates team has many years of experience of creating and managing plans like this.