Seven Mistakes that will ruin your Acquisition
Mistake #2: To buy the wrong company
The “This ir Our Best Option” Syndrome
Sometimes you will not have much of a choice of ideal acquisition targets. It is possible that the poll is limited due to the specific requirements you have for the right company, or perhaps you want to play in a competitive space (not recommended) where several other buyers are bidding for the same targets. Other times, the list may be longer and there will be more options and less urge to move forward. In any case, it is imperative to acquire the right company, as the consequences from a wrong choice are almost always beyond repair, and many times you will see that a wrongly acquired company will be sold after a few years of repeatedly trying to make it work.
Several facts lead to purchasing the wrong company, such as the lack of a thorough and accurate understanding of the business being acquired, overestimating the value, staring with the wrong acquisition strategy, conducting insufficient due diligence and list goes on. For example, making an acquisition to enter a new market, for which the acquiring company is not well prepared versus an expansion to an adjacent space which is much better understood and where the sales channels can be effective could be the deciding factor for failure or success. Some may argue that the due diligence should bring to light all the facts and details about the target, but the reality is that the confidence in the due diligence during an acquisition is overrated.