Finding the best buyers or targets for your project
The best buyers or targets
The companies subject to the transaction (potential buyers if you are selling, or potential targets if you are buying) are compiled in a long list.
If you are buying and already have identified the targets of interest for your project, this stage of the transaction will consist in collecting financial and operational data on companies in a given economic sector and geographical area:
- Their positioning (market segments, products/services, prices, distributional channels, …).
- Their specific business models.
- Their size, performance and financial strength.
- Their stock ownership and strategy.
If you are selling, establishing the long list is a determining step requiring in depth pondering.
In this case, which questions to ask first?
- What is your strategic environment in terms of competitors, technologies, substitution products, new entrants, barriers to entry, rules and regulations, negotiation power of clients and suppliers, …?
- Which companies in this environment would the acquisition of your company significantly benefit to?
- Would the transaction allow them to acquire key resources (technologies, clients, products, …)?
- Would the transaction allow them to improve their business model (for example: through a technological innovation, through an upstream or downstream integration, …)?
How to refine this first analysis?
By reviewing the identified companies in detail:
- How do their processes and organization (procurement, production, sales, R&D, …) differ from yours?
- What are your respective positionings (premium strategies, cost strategies, …)?
- What are their results and financial strength?
By reviewing the M&A transactions in your sector in recent years:
- What were the strategies of buyers?
- Which resources did they acquire and with which results?
- Which of these transactions transformed the business model of the buyer, and how?