A Checklist of Acquisition Search Criteria

Posted on: April 29th, 2014

Before embarking on a business acquisition, it is essential to develop a checklist of acquisition search criteria that reaffirms your goals, examines your strengths and weaknesses, and reviews your future business strategy.

Establishing clear and precise search criteria will help in quick and correct decisions especially when inadequate information is involved. However, your acquisition search criteria should never be so demanding that no prospect could ever possibly satisfy the requirements.

While not all of the criteria listed below will be specific to an industry, the list covers the general guidelines that should be considered when looking for an acquisition candidate.

Industry and type of company: Do you wish to stay within the same industry or do you wish to diversify?
Geographical location: Are you interested in extending your geographic range or would you prefer to add depth to existing locations?
Purchase price and financing terms: How much are you prepared to pay? Would you require seller financing or acquisition funding? What financing resources will you use?
Market and market strategy: What are the specific market characteristics that you would require in a target? Will the desired acquisition work towards increasing your market share or towards reaching a particular segment?
Liability issues: Will the desired acquisition affect your product liability insurance? What are the environment/safety regulations that the target will have difficulty complying?
Growth rate and financial strength: Does the acquisition show potential for market growth? Are there any assets that have been undervalued? Does the company have inventories that can be used as collateral for financing?
Management culture: Are you looking to buy a strong management team? Would you be willing to invest in building a new management culture?
Image, history and reputation: What should be the image of the target? Do you require a well-recognized brand? Do you wish to buy a business with a strong reputation for high quality?
Research and development (R&D): Are you looking for a firm with a strong R&D department?
Customer base: Are you looking towards expanding your own customer base or adding new types of customers?

Attract Capital can help you define your acquisition search criteria that can lead towards healthy and profitable acquisitions. Contact us to find out more about our acquisition services.

Mezzanine debt loans occupy the risky echelon beneath the bank but ahead of the equity in a capital structure. They are naturally subordinated to the bank loan via an intercreditor agreement wherein the senior lender retains the power to block their interest or force them to standstill.

In the middle market, acquisition financing providers are regarded as super intelligent and hardworking. They have distinguished themselves at elite banks or consulting firms and possess the ability to synthesize voluminous levels of info into a coherent, succinct takeaway or observation. This skill is extremely valuable in attributing causation to business drivers in a financial model used to foretell the future.

The deal world thrives on the belief that the institution providing acquisition financing will deliver on their promise. Lenders usually telegraph their capital capabilities early on during the sales pitch and give their deal sizes and hold levels for their fund.