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Acquisitions

Preparation

Acquisitions are hard work. Often, finding an acceptable business to buy requires years of sifting through logical and illogical companies to find the right fit at the right price at the right time. For the best analogy, think about the in-depth due diligence process for buying a business in reverse. That is what you will have to do in order to acquire a business.

Preparation begins with a definition of the range of businesses to be considered. This will include the niche, the markets served, the products, the size, the management capability, the location and not less than 150 other elements that go into making the right acquisition.

Libey uses a strategic planning protocol to arrive at the definition of the right fit through common sense and objective evaluation. Not every business should do acquisitions. Those that should must have a logical plan that can actually be successfully executed. In Libey’s experience, most acquisitions are not successful. The primary difficulty is the integration with the buyer’s existing business and over-exuberant expectations. We work very hard to manage those expectations and to define a “do-able” fit.

Search

The process of identifying a target acquisition is also hard work. You have to look at many companies in order to find one that has the elements outlined in the defined protocol for acquisition.

Search is also a process. It is a process that must be managed. Contacts with owners must be made, follow up on, and re-contacted again and again. In some cases, Libey has been successful in acquiring a business only after 10 years of repeated contact with the owner.  Sometimes the owner of a great company is just not ready to sell; sometimes they are never ready to sell; and sometimes they sold the business last week and didn’t call.

Libey’s primary advantage in making acquisitions is that we’ve been around so long. Don Libey knows most of the owners of most of the direct marketing businesses in the U.S. and the U.K. Often, he knows the owners’ timeframe for selling. He has the “insider’s” knowledge of who is buying and who is selling. And that is how businesses are bought and sold quietly, confidentially and without competition.

Process

Once the target has been defined and the candidate companies identified, the acquisition follows a process similar to that of the sale of a business, only in reverse.

The intermediary’s role in an acquisition is to obtain the lowest possible price for the client buyer for the target company. In contrast, the role in a sale of a company is to obtain the highest possible price for the client seller for the business being sold. Obviously, performance benchmarking, direct marketing evaluations, and negotiation skills are essential. Again, Libey adamantly believes that the best person to represent a direct marketing buyer in an acquisition is an experienced direct marketer.

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