Yesterday I was with a client and we were discussing a potential acquisition target. The acquisition target is a friend who is leaving the industry.
The opportunity to take on a range of new clients in this service based business is attractive and the potential scale it could create is significant.
During the conversation we wee having about this opportunity to acquire it became apparent to me that this smart and successful business person was looking to do a favour for a friend.
I get this completely however – I reminded my client that when looking to make any acquisition, takeover or business purchase, the same due diligence is required.
My client had spent many years building a very clean, very well considered business inside a highly regulated industry.
By his own assessment – his friend probably had not applied the same rigour and therefore there needs to be a discount applied for this to the business that is being acquired.
In my experience there should be the “no friends in business” approach to any potential acquisition or takeover. The reason?
Because there are no friends in business.
Do the deal on the basis of your core values, in this instance, fairness of course was one. So I reminded him he could put a good deal together that suited both parties however it must serve the plan he has for this business.
The growth plan is clearly laid out by me and him – and for good reason – when these opportunities come up the question you always must ask is – “does this decision to takeover this business take me towards my lifestyle goal or away from it?”