The pre-pre-announce self-assessment

There is a new strategy in place and a plan to expand. Just like your customers, the ideal company or business unit is being defined and the numbers crunched on the levels of growth you are hoping to achieve within the first couple of years. That last part being very important as that factors into the break-even point for not just the initial purchase, but the integration costs.

Granted, the integration costs won’t really begin to factor in until after close, is it possible to get a rough handle on that at the beginning?

At this point, the answer should be fairly obvious, and you’re wondering if this is when you should click the unsubscribe link, but bear with me for a moment and allow me to walk you through an exercise.

Look at the type of acquisition you’re thinking about performing, whether a business unit or full-fledged company. Think of the various parts of the business: sales, marketing, inventory, people, etc.

Got it?

Now looking at your own organization, perform the same exercise, but this time think of the tools you are using. Things like Salesforce, Azure, Workday, Oracle, etc. Remember, this is a high-level exercise, but the more accurate, the better.

These are the key questions to ask yourself and your team:

  • If you were to buy your ideal company tomorrow, and they happened to have the same technology, what do you suppose your up-front costs would look like and then your recurring costs?

  • Assuming you keep your current staff, and their current obligations, what would a reasonable timeframe look like?

    • How would this change if you could bring on others whether as independent contractors or from the ideal company?

    • Does this account things assuming ramp-up time or retention costs?

  • How do these numbers change if you and they are both running cloud based offerings?

    • What if one is in the cloud and the other on-prem?

    • What if both are on-prem?

  • What are you running that is custom and your company’s “special sauce?”

    • Does this apply to your ideal company?

You can adjust these answers to account for different technologies you may acquire as well. For the answers that make you or your CIO nervous, now you have an idea of what to focus on as you go deeper into the due-diligence process and a more realistic post-close date.