CEO Advisor Newsletter May 2017
Mergers and Acquisitions of
A growth acquisition also enables a privately-held company to develop a competitive advantage by increasing their depth of management team, technology and intellectual property, flexibility, growth and shareholder value. The most common reasons for a private company to acquire or merge are strategic growth, talent growth, customer growth, entering a new geographic market or industry (buy vs. build) or preparation for an exit. CEO Advisor has decades of experience in mergers and acquisitions of private companies. Gain the needed expertise to evaluate your options.
There are several reasons why private companies choose to expand through growth transactions rather than grow internally or organically. First of all, growth transactions happen much faster, whereas organic growth takes time as sales grow. A privately-held company's goal may be to eliminate a competitor, enter a new industry or geographic market, introduce a new product line, acquire key technology, products or services, or bring on the talent and management team that results from a growth transaction.
Expansion can be accomplished through acquisitions, mergers, asset acquisitions and similar transactions. The following methods can be used to help a private company grow expeditiously.
Acquisition - An acquisition occurs when a public or private company buys the stock of another company. An acquisition may also occur as an "asset purchase", where rather than buying the stock, the buyer simply buys the entirety or a portion of the assets of another company. The assets may be tangible such as customers, inventory and machinery, or intangible assets such as intellectual property (software, patents and trademarks). The selling company may then continue as a smaller company or dissolve after the sale.
Merger - A merger is when two companies combine to form a single entity under a consolidated management and ownership. A merger can take place through an amalgamation or absorption. Amalgamation is when two or more companies enter into the merger agreement to form a completely new entity. In this type of merger, both companies lose their identity and a new company is formed to manage the consolidated assets. Amalgamation tends to occur when both companies are of equal size. Absorption is when the merger occurs between two entities of a dissimilar size. In such case, the larger company absorbs the smaller one. The merger dissolves the smaller company and places all of its assets in the control of the larger company.
Talent Acquisition - An acquisition-by-hire may occur especially when the target private company is quite small or is in the startup phase. In this case, the acquiring company simply hires the staff of the target private company, thereby acquiring its talent (if that is its main asset). The target private company simply dissolves and few legal issues are involved.
Strategic Alliance - A strategic alliance can range from a large distributor or reseller marketing and selling your products to a larger alliance with financial backing or special terms.
Joint Venture - A joint venture is when two or more private companies enter into an agreement to allot a portion of resources towards the achievement of a particular goal over a designated period of time. Synergies occur when businesses capitalize on joint opportunities or other combined efforts to obtain greater results than working alone, whether it is increased revenue or decreased costs or both.
CEO Advisor, Inc., has the expertise to guide your company through the many steps involved in a merger or acquisition. Contact Mark Hartsell, MBA, CEO of CEO Advisor, Inc. today to discuss your growth needs at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit www.CEOAdvisor.com for more information.
The Importance of Planning
- CEO Advisor, Inc. provides expertise in helping CEOs, presidents and business owners of small to mid-size companies focus on priorities to grow their businesses to the next level. We meet with many CEOs and business owners and we ask them critical questions about planning and managing their business such as:
Benefits of Planning
Guide Your GrowthYour business will grow or not depending on many factors, including overall economic trends, size of your industry, growth of your industry, specific market needs, sales strategy, marketing, hard work and other factors. Businesses that plan do it to guide and accelerate their growth so they consistently move towards defined objectives rather than just reacting to business events.
Manage PrioritiesManaging people involves focus and constantly managing priorities. Allocate resources where they will generate the most profit. Work towards your strengths and away from your weaknesses. Grow the company by doing the most important things according to your current needs and long-term objectives.
Assign ResponsibilitiesA plan gives you a place to develop organizational responsibilities. Accountability drives businesses forward. Assign tasks and projects that achieve your goals and hold your people accountable.
Track ProgressWith a written plan, you can track your progress towards goals, measure results, and better manage the business. Without a plan, how do you tell whether or not you are moving in the right direction or measure success? Use a dashboard style reporting to track key metrics in your business.
StrategyStrategy involves taking a hard look at your products and services, your core competencies, your target markets, geographic sales coverage, your customers, pricing, operations, sales and marketing. Bring in the needed expertise to ensure your strategy yields success.
Specific Responsibilities, Goals, Tasks, Deadlines and BudgetsWe call these milestones. These key aspects of business planning are critical to business success. Effective management of your people coupled with time management will yield higher profits and company value.
Financial ForecastOne of the most important aspects of strategic planning is the financial forecast. A business needs to set financial goals and targets to truly measure its success and drive the business forward. Without a monthly forecast you will never optimize your business and you will settle each month on results of the past.
CEO Advisor, Inc. has the expertise, coupled with hands-on advice to help you plan, strategize, grow and succeed.
Contact Mark Hartsell, MBA, CEO at (949) 629-2520, by email at mhartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.