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How do you typically do to find acquisition targets? One way is of course through your network of co-workers and M&A advisors, but beyond that to find privately owned companies that are not officially for sale?
Go through a list of competitors, suppliers, and customers and perform market analysis, product analysis, and using industry data such as using industry databases like SP Global IQ, stock market data..etc.
I am just starting, so I can not speak from experience, but I am listening to podcasts in my field of search (ex. machinery, SME, logistics) and it is a starting point to hear about interesting targets.
Sometimes they are seller driven. For example, they want to spin off non-core divisions. Or perhaps the parent is short of cash.
You could contact a data broker and ask them to compile a list of companies in a particular sector, at a required revenue size and location. Once you have that list, write to the owner or make a call. Good post question, thank you.
The best way to approach the list of targets is to know your industry very well. This should provide a handful of target buyers, who are either in your space or are in a parallel space.
You can then consult with a paid advisor, who is working mainly with organisations in your sector. This will provide a fresh approach, with ideas for potential acquirers outside of your immediate vicinity.
1. Define Your M&A Criteria for Acquisition, which requires understanding your own company’s strategic goals.
2. Assess Key Competitors in the Market. This can be both through public information but also more proprietary databases, such as those listed by others already.
3. Collect Quantitative and Qualitative Data on Acquisition Targets, again through either public or proprietary avenues.Great questions!
I completely agree with the points laid-out above, but you should also determine which potential target companies would enrich (or ‘rescue’) your current company. This type of justification can help you determine which non-financial benefits (e.g., branding) could also come about through a potential acquisition. Thanks for posting!
Networking within your target industry, especially with retired CEOs and board-members / shareholders can be valuable as well.
I also think that the best way to find acquisition targets is to know very well your industry and your peers. If you know your industry you know in which segments an expansion would be profitable and value creating. If you want to expand to another region abroad then you may need more assistance by an expert in order to analyse and better study all aspects of that market and competition in the region (all 5 key competitive forces that Porter points out).
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