Rodney Rice //July 31, 2014//
(Editor's note: This is the first part of a two-part series about actions to take and questions to ask when acquiring or selling a business.)
Successful business acquisitions are difficult to achieve. In fact, the prevailing wisdom is that 50 to 90 percent of all transactions fail to achieve their underlying value proposition. While it can be a difficult (and enjoyable) process with no guarantees, by performing your due diligence, you can lay the groundwork for a successful acquisition.
There are a variety of reasons why business combinations don’t meet their value proposition. These can include incongruent strategies between the acquirer and the target or within the target pre- and post-acquisition, confirmation biases, sunk costs, deal fever and integration challenges. To increase the likelihood of a successful acquisition, here are 10 questions to consider to help avoid a failed transaction.
The deal process can be a lot of fun, but it can also be a grind. Realize this process is just one important step toward achieving your value proposition, and keep the above questions in mind as you navigate through to your goal.