By Jon Randall
Chief Coaching Officer
Acquisitions are a great way to exponentially grow your business at a quantum level. I’ve seen a lot of acquisitions that go well and are very profitable, but I’ve also seen acquisitions that have bankrupted people, so you have to be careful. It’s very important that you know your numbers and that you know exactly what you’re getting into.
I find a lot of times that the excitement of a deal can sometimes cloud reality, and sometimes the amount of revenue or expected growth might be a little bit exuberant in a deal. I think it’s important to be realistic and understand what’s going to be coming in. I often find that people underestimate what it’s going to take to make the acquisition happen and what their financial investment out of pocket will be. If you’re leveraging somebody else in some kind of note or debt on that business, what’s the cash flow going to look like? What will the payments look like?
You also have to consider all the other expenses associated with taking on all this new revenue and these new clients. You might be buying a business where you have another office space, and you might be hiring staff of that business. You may have to staff up and hire on your own to accommodate the additional clients. Really, truly anticipating those needs is critical.
Acquisitions can be great, but they can also bankrupt you if you’re not careful, so let’s make sure you’re making great decisions on your acquisitions. At D2, we love reviewing these. We’ve been part of hundreds of acquisitions with the practices we work with. Reviewing those numbers and getting someone like a CFO who can take a third-party look at this is critical so that you’re making the best decisions you can for you and your business.
The opportunities are out there and there will be more and more and more of them if you’re in the buying mode. Keep your ears out. Look for them. Be around other potential sellers. Find ways to be with them. We’re finding a lot of deals are done one-on-one. “Hey, I know you. I like you. I would like to have you be the one that buys my business.”
It’s tough if you’re just cold calling or cold emailing people like recruiters. It happens, and some people get lucky with that, but you’ve got to find other ways. It’s a lot like client acquisition. Instead of cold calling people like the old days, how can you get access to somebody quicker? How can you leverage a connector who can get you access to people quickly is what you want to look for.
Find those acquisitions. Just make sure you’re making good and profitable decisions for your business. To schedule a complimentary consultation to talk more about this topic, email jon@dynamicdirections-d2.com, call 270-663-7264 or fill out the box to the right.