Write the thesis before looking at targets
An acquisition thesis states what the business is trying to obtain and why it would be better placed than another buyer to obtain it: access to a market, geographic density, a scarce skill, production capacity. Without one, every file presented looks interesting and selection happens on availability rather than strategy. A written thesis also makes it possible to say no quickly, which costs less than saying no late.
Verify what will decide the outcome, not what is reassuring
Acquisition reviews readily confirm what is already believed. The useful questions concern what would break the thesis: real customer concentration, dependence on a few individuals, the state of the systems that will need to be brought together, off-balance-sheet commitments. A diligence that found nothing is not necessarily good news; sometimes it is a sign that it did not look in the right places.
Decide the degree of integration before signing
The value of an acquisition is realised after closing, and it depends on a trade-off that is too often made afterwards: what is brought together, and what stays autonomous? The financial framework and management reporting usually need to converge quickly, because a leadership team cannot decide on two sets of numbers. The commercial offer or the brand can stay separate for longer. Writing that trade-off down before signing prevents it from being settled by default, one project at a time.
Carry what is learned from one deal to the next
What makes external growth repeatable is not volume but memory: a list of questions that have already earned their place, an integration plan template, a shared base of definitions, and an honest review of what did not work last time. Without that memory, the third acquisition repeats the work of the first, with the same surprises and a more tired team.
Four questions for your next management meeting.
- Is the acquisition thesis written down and shared?
- Is it known what would break that thesis?
- Is the degree of integration decided before signing?
- What has been kept from the previous deal?