Growing businesses have multiple levers that can be pulled separately or in unison to continue scaling and expanding. And while many companies choose to grow internally, there’s always the option of acquiring other businesses to supercharge results and instantly expand.
Acquiring a business is certainly a complicated path to expansion, but it’s also a highly attractive one for a variety of reasons. This includes:
- Increased market share. If you’re acquiring a business that happens to be a competitor, you can instantly increase your market share. If you currently own 20 percent of the market share and the competition has 15 percent, you suddenly catapult to 35 percent. That might make you the industry leader overnight!
- Expansion into new markets. Sometimes you acquire a business outside of your industry or niche. In this case, it allows you to expand vertically or horizontally. This can improve top-line revenue and/or reduce costs and benefit profit margins.
- Advanced tech and IP. In some situations, an acquisition is about acquiring a specific piece of technology or intellectual property (IP). This may prove to be the final boost you need to accelerate growth and initiate further expansion.
- Talent acquisition. One of the secondary benefits of an acquisition is the opportunity to welcome new talent into your team. Whether it’s a seasoned executive or a highly effective sales staff, this is one benefit you can’t ignore.
Mergers and acquisitions aren’t the correct solutions in every situation, but they often make sense. It’s ultimately up to your team to sit down and discuss the pros, cons, opportunities, drawbacks, and possibilities of pursuing this option.
Helpful Acquisition Tips
Should your business choose to move forward with the acquisition route, here are some essential tips to be aware of:
1. Assemble a Talented Team
Don’t do anything until you first develop an acquisition team. This is a very important step and should not be delayed. (Many businesses make the mistake of starting the search and then forming a team on the fly, but this results in missed opportunities and foundational errors that can compromise an otherwise smart acquisition.)
A good acquisition team should include an experienced mergers and acquisitions advisor, a responsible executive, an attorney, an HR professional, and an IT expert. You’ll also want to bring on a public relations professional as soon as possible. This will ensure you control the messaging that customers, investors, and even employees hear.
2. Do Extensive Due Diligence
With the support of a talented dream team, you’re equipped to find the best acquisition opportunities. As you narrow your targets down, you’ll want to identify and implement a very detailed due diligence process for acquiring a business. This may include an extensive, objective analysis that consists of a letter of intent, confidentiality agreement, contracts and leases, financial statements, tax returns, and other important documents.
3. Make an Initial Offer
If the due diligence checks out, then it’s time to work on formulating an offer for acquiring a business. While the first offer almost certainly won’t be the offer that gets accepted, it’s the single most important offer you’ll make. It frames the transaction and sets the tone for the rest of the negotiations. It’s generally a good idea to offer no more than 75 to 90 percent of what you’re willing to pay. It should be low enough to leave room to inch up, but not so low that the other party could potentially see it as an insult.
Your first offer won’t get accepted. But unless you’ve totally insulted the other business, they should come back with a counter. Now is where things get really interesting. Negotiations ensue and it’s time to counter back and forth. The offer consists of a variety of elements – not just a price tag – so consider all of these variables in your subsequent counters.
Adding it All Up
As valuable as an acquisition can be, the process is often filled with friction. It’s up to your team to make the transition after closing as smooth as possible.
It’s very important that you respect the products, services, employees, and customers that the acquired business has. If you come into an acquisition and attempt to shake things up on day one, you’re going to get backlash. There’s nothing wrong with making changes – you now own the business – but be diplomatic and patient. Build trust, work together, and gradually introduce changes.
Girl Scouts setting strong example by protesting bad business practices
(BUSINESS ENTREPRENEUR) Girl Scouts cookie sales are designed to teach children business skills, so it’s no surprise several troops are refusing to sell this year based on bad business practices.
The Girl Scout Cookie season is officially starting! Even though you probably won’t see scouts out selling boxes in person this year, cookie sales promise to be as strong as ever as they shift online.
But at least one group of Girl Scouts have opted out of selling cookies completely this year. Troop 12026 in Jersey City, New Jersey, which is composed of 21 girls between 10 and 15 years old, is protesting against palm oil in the company’s cookie recipes.
It wasn’t a small sacrifice for them either. The cookie fundraiser earns the troop around $1,000 every year that goes towards funding their events and materials.
Troop leader Gina Verdibello, who has 2 daughters in the troop, says she was originally made aware of the issue through an online petition launched by 14-year old Tennessee Girl Scout, Olivia Chaffin.
“As much as they love the cookies, and they love selling, they didn’t feel it was right to do until the Girl Scouts fixed the issue,” Verdibello said of her group.
Being the world’s most popular vegetable oil, palm oil is a staple ingredient in countless food products. It’s common in fuel, animal feed, pharmaceuticals and cosmetics, and its derivatives can go by any of over 200 different names.
Here’s the rub: In December 2020, the AP reported that many of the world’s biggest food manufacturers make use of palm oil produced with child labor. Little Brownie Bakers, one of two bakers that produce the country’s Girl Scout Cookies, is among them.
Palm oil is pressed from the fruit of the oil palm, which is predominantly grown in Indonesia and Malaysia. The children of palm oil farmers are often pulled out of school to work alongside their parents, risking their safety to collect every palm kernel as fast as possible. Injury, sexual assault, and chemical exposure are everyday occurrences.
COVID-19 has made conditions for these underage workers even worse: the virus has decimated the available supply of plantation labor, and demand for palm oil (ie, the amount the world is eating) hasn’t decreased a bit.
Ethical and sustainable palm oil producers are out there, in theory. The Girl Scouts are a member of the Roundtable on Sustainable Palm Oil, which has been pushing for change and accountability in the industry since 2004. However, the AP report claims RSPO auditors are only given limited access to inspect workers’ conditions. Critics say the RSPO only serves to greenwash the labor and environmental issues around palm plantations, rather than taking the steps to stop bad farming practices.
There are complete alternatives to palm oil, including oil harvested from algae, commercially available. But of course, these are more expensive and harder to source.
The Girl Scouts claim to set an example for entrepreneuring young women. But at this rate, it seems the girls themselves are setting the example for the company to follow.
To quote one of the Scouts from Troop 12026: “For a company that shows itself as trying to bring girls up, you sure aren’t bringing up the girls in the countries that you are using child labor from.”
How can a small business beat a large competitor moving in next door?
(BUSINESS ENTREPRENEUR) How do you stand out when a big competitor moves to your neighborhood? Reddit has a few suggestions – some obvious, some not so much.
Small businesses, especially restaurants have been hit hard by lockdowns. Many closed for good this year, and those that are still hanging on are in a precarious position as their local economies shift.
Last week, a user on r/smallbusiness asked a timeless question that is especially relevant right now. Reddit user longbottomjr writes: “We have a strong competitor moving in next door in a few months. Our restaurant is one that pays the bills but […] I feel that if this new competitor takes up enough market share we will lose our restaurant. Can anyone chime in with resources/ideas I can use to help put together our plan of action?”
Comments quickly pointed out what common sense would dictate.
First, ensure the basics are covered. Being clean, quick, friendly, and high quality will take you far, no matter what competition you’re up against. And as u/horsemullet said, “Customer service also happens before someone walks through the door!” So make sure that your online hours, contact info, menus and social media accounts are up to date and accurate.
Another point emerged that is less intuitive: Competing businesses will naturally gravitate towards similar locations. This is a well-established phenomenon known within game theory as Nash’s Equilibrium. In the restaurant industry, this is actually a good thing. It brings entirely new customers to the area and ultimately benefits all the other nearby businesses, too.
Take advantage of the attention by offering something other spots don’t, like loyalty rewards, specials, unique offerings, or meal deals.
Speaking of the area, a great way to stand out from larger competitors is to build relationships with the community you serve, as u/sugarface2134 emphasized. “In my city there are two Italian restaurants in the same location – just across the parking lot from each other. We always pick the smaller one because the owner truly makes you feel like a member of the family.”
That’s an advantage of being a small, local business that all the money in the world couldn’t buy. Get to know your customers personally and you will not only create loyal regulars, but friends as well.
One of the top rated responses, from u/seefooddiet2200, made an often overlooked but critically important point.
“Talk to your staff and see if they have any ideas. These are the people that are working every single day and may know one or two ‘annoying’ things that if they were switched would make things easier. Or maybe they see that there’s specific things people ask for that you don’t serve. Every single [one] of your employees is a gold mine of insight, you just need to be open to listening to them.”
That is applicable to any business owner who wants to improve their practices.
Ask employees what they think, especially the ones who have stuck around a long time. Not only do they know the ins-and-outs of their jobs, but this builds rapport and trust with your staff. A good boss realizes that employees are more than their job descriptions. They have valuable thoughts about what’s working and not working, and direct access to customer’s opinions.
Good luck, u/longbottomjr! We’ll be rooting for you.
This app lets you swipe right on the co-founder of your dreams
(BUSINESS ENTREPRENEUR) It’s said that business can be a lot like dating – and Tertle is taking advantage of that to find you a vetted, high-quality co-founder with a few swipes.
Much like there is a dating app for every romantic match possible, there is now a way to match with your ideal co-founder. And the name will help you ease out of your shell when connecting with your new partner.
Tertle is a new online app that helps you find the co-founder that best suits your needs. According to developers, “Tertle sends you frequent, vetted, high-quality co-founder matches via email or WhatsApp based on things that matter to you – giving you precious time back and putting an end to endless profile crawling.”
So how does it work? Like any other matching app, you first start by creating your profile. Tell Tertle a little bit more about you and what you’re looking for in a co-founder.
Next comes the vetted matching. Tertle will match you up based on things you both care about – like your skill sets, location, values, and interests. Finally, you connect and chat. Receive weekly 1:1 video chat calendar invitations at a time that suits you.
When answering why Tertle was founded, developers wrote, “We, like you, are startup fanatics. Finding the right co-founders is one of the most important decisions you’ll ever make in pursuit of a successful venture. We think there’s nothing currently out there that really hits the mark in helping like-minded co-founders easily connect—and so, Tertle hatched.”
As a reviewer pointed out on Product Hunt, the safest (and most heard about) route when selecting a co-founder is to choose someone you went to college with or have a long-standing relationship with. However, this may not always be an option and so it’s nice to have a little help from profile-matching algorithms.
Tertle developer Ryan Connaughton appreciated the Product Hunt feedback and expressed the following, “In terms of the algorithm, I’ve been matching people manually to test the waters while also working on a simple algorithm as MVP (what skillsets they’re looking for and location IF thats also important to them).
Following an MVP, my thinking is I can vet harder with more in-depth data collection (personality types, values, problems spaces of interest, etc). Of-course this will require a much deeper user-research/spike piece first before I can get to the right solution.
In addition, there can only be so much ‘filtering/vetting’ you can do before you have to get some hard validation that this is the right person – that being, actually working together. So assuming that I can get the prerequisites above right and there’s interest, I think there’s then potential of guided mini-hackathon style projects or some kind of ‘trials’.
Worst case scenario: You meet someone new, learn some stuff, give each other feedback for you to grow and have fun building something. Best case scenario: All of the above, plus the problem/solution holds water and/or you form a continued lasting relationship.”
The site boasts being free to beta users forever; so, if you’re on the hunt for a co-founder, it may be worth it to join the waitlist and see what’s out there.
Business Finance5 hours ago
6 questions to ask when considering a startup accelerator
Business Entrepreneur1 week ago
How can a small business beat a large competitor moving in next door?
Opinion Editorials2 weeks ago
Ways to socialize safely during quarantine
Opinion Editorials5 days ago
Freelance is the Future? I call bull malarky
Business Marketing2 days ago
Healthcare during pandemic goes virtual, looks to stay that way
Business Marketing2 weeks ago
Ghost Reply has us asking: Should you shame a recruiter who ghosted you?
Business Finance2 weeks ago
Under-representation of women in fintech: Let’s talk about it
Tech News1 week ago
The top 10 languages you can know as a programmer