Acquisities
ONDERNEMERSLESSEN MET ADRIE REINDERS
Acquisitions are often fantasised about. It seems a quick route to growth and is often used by megalomaniacal mangement to stimulate their own egos.
Many acquisitions are doomed to fail - because of cultural differences, (uncommunicated) differences in agenda, egos that are not in sync with business objectives. The latter is why you so often will see that there are rounds and rounds of discussions between the management of both companies about who will end up in which role and earn what.
I wanted to raise the topic of acquisitions in SME's here. Before you ever do an acquisition yourself, you have to ask yourself a number of questions, starting with - does this merger actually enhance the worth of the organisation and the shareholders and what does the risk profile look like. Following in quick order thereafter are - can I afford it, and how do we pay for it - cash, shares or a combination of the two?
Other questions to consider are -
Do we settle for an earn-out (i.e. payments over time based on performance) or do we pay upfront.
Do I leave management in place, or do I replace them immediately. I always prefer the latter, although that does imply you are not able to opt for an earn-out ofcourse. The advantage is that you can integrate the company fully with your own and change the name if you wish.
Many acquisitions are doomed to fail - because of cultural differences, (uncommunicated) differences in agenda, egos that are not in sync with business objectives. The latter is why you so often will see that there are rounds and rounds of discussions between the management of both companies about who will end up in which role and earn what.
I wanted to raise the topic of acquisitions in SME's here. Before you ever do an acquisition yourself, you have to ask yourself a number of questions, starting with - does this merger actually enhance the worth of the organisation and the shareholders and what does the risk profile look like. Following in quick order thereafter are - can I afford it, and how do we pay for it - cash, shares or a combination of the two?
Other questions to consider are -
Do we settle for an earn-out (i.e. payments over time based on performance) or do we pay upfront.
Do I leave management in place, or do I replace them immediately. I always prefer the latter, although that does imply you are not able to opt for an earn-out ofcourse. The advantage is that you can integrate the company fully with your own and change the name if you wish.