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January 14, 2020

How Can You Tell if an Acquisition is Right – or Wrong?

In the past few years, our industry has seen an active climate of mergers and acquisitions: Approximately 30 NSCA integrator members have been acquired in the last year alone.

Although many experience great success in organic growth through hiring, completing successful acquisitions is another way to expand in many cases.

Most of these acquisition deals could be deemed “successful” when all is said and done – but there are also a handful we could categorize as “not successful.”

(Of the 30 member companies that completed acquisitions in the past year, we would classify at least five as “not successful.”) Why? Because acquisitions aren’t always the right way to spur growth if they’re not the right “fit” for both parties.

A successful acquisition leads to:

• Increased market share
• Purchasing leverage
• Increased diversification in technologies and/or markets
• Better relationships with key accounts

In the “not successful” instances we’ve seen in the past few years, lack of success has come down to people and culture (or the inability to “achieve synergy”).

Most of the important boxes were checked when it came to an integrator acquiring a company. So what happened? Due diligence didn’t provide anyone with insight into how well the organizations would blend in terms of corporate culture.

Sometimes these deals are perceived as a way to grow through the acquisition of “people” instead of having a real interest in the business those people bring with them – or the business that was purchased.

But the people who work for these businesses did so because they enjoyed the culture (whether it was a positive one or not).

In one instance, after an acquisition, an integrator discovered that the employees they acquired wanted no part of utilization reporting, process improvement, accountability, productivity control measures, or executable goals. Within a year, only two of 23 employees were remaining!

Some integrators have important stories to tell about things that can go wrong in the acquisition process – because they’ve experienced these things firsthand. NSCA has been watching and observing, learning lessons, and speaking with buyers and sellers. We’ve learned many things as a result. And these are lessons that need to be shared.

Our new white paper – Mergers & Acquisitions: Don’t Grow Your Business into the Ground – will guide you through a successful growth process based on the positive – and negative – experiences of NSCA members.

The white paper also includes thoughts from several of NSCA’s trusted advisors – many of whom have walked away from far more deals than they have completed.

Download it now to get your very own checklist of what to look for during the acquisition process, indicators of a no-go deal, and how to deal with gut feelings during the process.

P.S. NSCA offers several resources to assist with the merger and acquisition process:

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