Why you should implement a systematic search program

While a disciplined approach to evaluating M&A opportunities is often recommended, only an effective, systematic search program that uncovers opportunities make possible the disciplined approach to succeed.  For without discovering the opportunities, no approach is given the chance to be applied.  A  systematic search program is integral to the business of intermediaries like Franklin Hamilton.  Corporations with acquisition growth strategies would benefit greatly from adopting a similar program or working with an intermediary who can demonstrate the effectiveness of their search implementation.  

A systematic search program begins by setting realistic search criteria.  Often, the ideal corporate goals defined at the onset of an acquisition strategy are overly ambitions.  As reflected in the initial search criteria, they are out-of-touch with the real world and therefore result in overlooking any real opportunities that come along.  Companies actively searching for over a year without any real prospects may view this as an indication that adjustments need to be made in their acquisition process, starting with redefining the search criteria. 

Proven strategies often use a two step approach.  The initial screening criteria should be limited to a handful of attributes such as, industry, size and price.  If a company passes the initial criteria, the next step is to examine the remaining attributes of the company.  Keeping a strategic focus and sticking to guidelines that define the type of fit the company is looking for is critical during the second phase of the sifting process.  Successful acquirers are always on the lookout for deals.  That means looking at everything.  Using a two step approach helps strike a balance between spending too much time on unrealistic sellers and preventing the elimination of real deals. 

Once the screening process is in order, the search program must be designed to make possible a steady stream of deals to flow through the sifting process.  An important distinction of the marketplace makes this process more promising.  While it is true that good deals are hard to find, many companies assume there are too few deals around let alone any good ones.  Intermediaries who proactively work an industry have evidence of quite the opposite.  There are too many deals but not enough good ones.  The latter more accurate depiction of the market suggests good deals can be found but requires the hard work of examining many deals and demonstrates why a systematic search program will eventually improve the odds in buyer's favor.

Franklin Hamilton can assist in providing clients with a systematic search program and provide the steady stream of deal flows to cycle through your sifting process.