Posted on: April 29th, 2014

Before embarking on a business acquisition, it is essential to develop a checklist of acquisition search criteria that reaffirms your goals, examines your strengths and weaknesses, and reviews your future business strategy.

Establishing clear and precise search criteria will help in quick and correct decisions especially when inadequate information is involved. However, your acquisition search criteria should never be so demanding that no prospect could ever possibly satisfy the requirements.

While not all of the criteria listed below will be specific to an industry, the list covers the general guidelines that should be considered when looking for an acquisition candidate.

Industry and type of company: Do you wish to stay within the same industry or do you wish to diversify?
Geographical location: Are you interested in extending your geographic range or would you prefer to add depth to existing locations?
Purchase price and financing terms: How much are you prepared to pay? Would you require seller financing or acquisition funding? What financing resources will you use?
Market and market strategy: What are the specific market characteristics that you would require in a target? Will the desired acquisition work towards increasing your market share or towards reaching a particular segment?
Liability issues: Will the desired acquisition affect your product liability insurance? What are the environment/safety regulations that the target will have difficulty complying?
Growth rate and financial strength: Does the acquisition show potential for market growth? Are there any assets that have been undervalued? Does the company have inventories that can be used as collateral for financing?
Management culture: Are you looking to buy a strong management team? Would you be willing to invest in building a new management culture?
Image, history and reputation: What should be the image of the target? Do you require a well-recognized brand? Do you wish to buy a business with a strong reputation for high quality?
Research and development (R&D): Are you looking for a firm with a strong R&D department?
Customer base: Are you looking towards expanding your own customer base or adding new types of customers?

Attract Capital can help you define your acquisition search criteria that can lead towards healthy and profitable acquisitions. Contact us to find out more about our acquisition services.

As the Fed decides to ease interest rates, middle market acquisition financing structures will benefit in a number of ways. The underlying values of middle market companies will increase leading to a higher enterprise value and lower loan to value ratios for existing portfolio companies of acquisition financing lenders.

The role of acquisition financing is infrequently elevated above a functional transactional one. When a business needs financing to acquire, they go to the market and source acquisition financing to supplement their equity investment to close the deal. Despite existing in many different forms, acquisition financing is rarely explained in terms of the value it brings to the acquirer.

Acquisition financing underwriting usually focuses on business and financial issues that underpin the stability of cash flow. Providers of acquisition financing usually validate the durability of a company’s competitive advantage and the depth of its resource base. Environmental issues are usually not a major part of the analysis in today’s service and technology-based economy.

Acquisition Search Criteria