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Growth & Acquisitions

A Three-Part Series by Will Stabler

About This Series

I wrote this article series in three parts over two months during early 2019 during a time of growth and acquisitions in the healthcare industry before the pandemic hit.

Articles in This Series

No matter how you slice it, acquisitions are about growth and therefore about sales. New products, new geography, more market power, new customers; it’s all about sales. So the decision to do a deal should be weighed explicitly against organic growth alternatives.
 
While the role and end objectives of acquisitions and sales are essentially the same, the execution processes are quite different. This article explores the nuances.
 
3. Growth Through Acquisitions: Start Here
All successful acquisitions are founded on one of two traits: a smart strategy or dumb luck. Making an acquisition that has an explicit role in your strategic plan will enable you to find a better target, ask better questions about it, make decisions more quickly and more logically and, hence, to increase your likelihood of deal success. 

Growth Through Acquisitions: Start Here

By Will Stabler

First published on March 2, 2019

This is the third, and ultimately became the final, article in a series on growth and acquisitions in the healthcare industry.

Are We Ready – Strategically – to Make an Acquisition?

Start with these questions:

  • Do we have a strategy that is well thought out and well articulated?
  •  Have we identified areas in our own internal capabilities that inhibit our fully realizing our strategy?
  •  Are there opportunities “at the edges” of our strategy where we could make an acquisition but still be within our management skills zone?

All successful acquisitions are founded on one of two traits: a smart strategy or dumb luck. Making an acquisition that has an explicit role in your strategic plan will enable you to find a better target, ask better questions about it, make decisions more quickly and more logically and, hence, to increase your likelihood of deal success. (We will address deal failure in a subsequent posting but for the moment it is essential that you understand that most deals fail to do what they were intended to do, so whatever you can do to shift the odds in your favor is a good thing.)

So get your strategy and the strategic role of your specific acquisition target laid out clearly in words of two syllables or less.

Strategy then is the foundation. If you can’t answer “yes” to the three questions above, get answers to them before you even consider doing a deal,

Akin to that if you are new to the acquisition world, DO NOT make an acquisition “opportunistically?” Opportunistic deals only succeed when done by companies that have the experience to move quickly to investigate and price a deal correctly and have a context for determining just how opportunistic the opportunity really is.

One of the biggest problems with “doing a deal” is that the professionals that brought you the idea, negotiated and structured the deal and then led the closing process all go away after closing. All to often newbie acquirers wake up the day after closing wondering what hit them and how they’re ever going to handle the process. (Those that don’t are in denial, an even more troublesome state.)

Growth Through Acquisitions: Some Important Mechanics

Are We Ready – Practically – to Make an Acquisition?

Last time we asked three questions to determine if you were stratefically ready to make an acquisition. That’s only half the readiness equation. The second half deals with the pracitcalities of readiness: do you have the right approach to launching the process and do you have the bandwidth to see it through? The goal, after all is not to do a deal but to do a deal that works.

Once you’ve established a strategic basis for making an acquisition, the next step is to find a workable target or set of targets. The benefit of assembling a set of possible targets is that it prevents you from “having to” acquire the one company that you’ve identified. When executives feel like they “have to” do something, they back themselves into a corner, which hinders logical thinking and reduces negotiating power.

For each-

  • Do we have the bandwidth manage the acquisition process without impacting our “day jobs?”