Acquisitions provide a great opportunity to achieve higher business valuation, but founders should carefully strategise their next move if they want to make a success of it.
Pre-acquisition planning is essential for founders who want to truly capitalise on an acquisition. During the recent acquisition of our biggest UK competitor, Laundrapp, myself and my team at Laundryheap applied a consumer and logistics-focused framework to the acquisition process, which allowed us to focus on enhancing our business model whilst maintaining our reputation as a leading on-demand platform.
In light of my recent experience, here are the four main factors that need to be considered during the pre-acquisition period:
The motivations behind your acquisition
To all the founders and CEOs contemplating an acquisition: don’t acquire just because you can. Ask yourself whether this business move truly supports your vision, or if it’s likely to fall under the umbrella of nice but unnecessary PR buzz. Just like choosing your investors, you need to make sure your acquisition won’t steer you down the wrong path. Companies often make the mistake of acquiring other businesses purely for the spectacle, but other factors also come into play. From branding and capacity to processing and supply chains – the more areas your business can benefit from, the more successful the transition will be. Our acquisition of Laundrapp was not only based on expanding our customer base, but also increasing our capacity, supply chains, and streamlining our logistical processing.
Do your research
Before confirming your acquisition, make sure you’ve conducted enough research. If the acquisition is in a completely new market, become fully versed on how it operates. New markets can come with different political and geographical regulations, employee rights, different languages and currencies. Equally, don’t assume success will be guaranteed if there aren’t any direct competitors in your target market – there could be a valid reason for this!
Integrating ecosystems
Effectively aligning both businesses’ systems, teams and brands can be a monumental task – one that will require a detailed integration plan ahead of your acquisition. Whether you decide to completely absorb the company you’re acquiring, or create a hybrid model to accommodate both, I would advise creating a timeline that focuses on short and long-term objectives, and aligning your key stakeholders around it.
Consider whether you need to consult external advisors for this process, or whether you’d like to assemble an integration team of existing employees – if you choose the latter, you’ll likely need to factor in changes to their capacity.
Managing expectations
Acquisitions come hand in hand with managing internal and external expectations, whether that refers to the duration of the transition, projected company growth, or the impact on employees. Make sure to give your team enough opportunity to feed back and highlight any areas that they believe are slipping through the cracks. This will also ensure company cohesion during your transition period, which can be particularly effective if you plan to onboard and retain new employees.
Whilst it’s important to be fully prepared for an acquisition, make sure to designate an equal amount of time in creating a post-acquisition plan. Not only will you be acquiring a business’ benefits, you’ll also be acquiring their liabilities, some of which you may know about, and others you’ll likely discover later down the line. Accounting for the unexpected before, during and after your acquisition, is the best way to fully prepare yourself – and your business – for your next phase.
