Acquisitions as Part of Your Strategic Plan
April 28, 2011
The mergers & acquisitions market has been fairly quiet over the last couple of years. That's largely due to the fact that bank financing, the cheapest form of capital in a corporate finance deal, has been so hard to secure. However, bank financing is becoming more available for businesses with healthy cash flow and balance sheets, particularly if they are investing in the growth of their company.
An area of growth that CEO's should be considering is acquisitions. The Austin Business Journal reported this week that the national median sale prices for businesses have dropped significantly over the last couple of years. A business that cost $190,000 in 2008 would only cost $150,000 today.
So as you are looking at your long-term, strategic plan, what areas of your business could be bolstered by an acquisition? Maybe purchasing a business allows you to break into a new geographic territory sooner than you thought. Or you might seek a company that has complementary products or services to your core business. An organization assessment might show that you are weak in an area such as research and development. A strategic acquisition could fill holes in your organization that could take you to the next level.
With many companies left in a weakened position, an improving economy, and willing finance partners, now could be the perfect time for you to execute an acquisition to send your company on an even higher trajectory.