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OIB Opportunities in Business

Reasons Acquisitions Fail and How to Succeed

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Growth through acquisition is promising but is not without its pitfalls. There are several common, avoidable reasons acquisitions fail and learning from these mistakes and oversights can set your company up for successful future acquisitions.

Leadership: Acquisitions fail when leadership is not proactive or sufficiently involved in the acquisition process.

Due diligence: Acquisitions fail when companies do not act on due-diligence discoveries.

Technology: Acquisitions fail when buyers have unrealistic expectations of system integration.

Strategy: Acquisitions fail when a clear strategy isn’t used to determine integration goals.

Talent:  Acquisitions fail when buyers lose key talent during the process.

Financial overextension: Acquisitions fail when negotiations get dragged out and deplete financial resources.

Culture: Acquisitions fail when buyers trample the culture of the company being acquired.

Synergy: Acquisitions fail when buyers come in with too high of expectations of merger synergies.

Communication: Acquisitions fail when communication breaks down and causes a chain reaction of disconnect and disappointment.

A few tips to Succeed

  • Be thorough. Leave no stone unturned throughout the acquisition process.
  • Pay attention to mergers and acquisitions in the news. Learn from other buyers!
  • Acquisitions take time and cost money – be patient and methodical.

Your diligence will pay off and your company will grow! Considering business acquisition? Reach us anytime at 612.331.8392 or by email at info@oibmn.com.

Automotive aftermarket parts and distribution business.

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TYPE OF BUSINESS:  Automotive aftermarket parts and distribution business, established over 40 years ago. This business is located in south metro area next to a major freeway for easy accessibility to the entire Twin Cities area. This business “specializes” in a few parts that give them the competitive advantages over typical parts distributors.  All of the product are high quality, meet dealer specifications and are covered by the manufacturer’s warranty.  This business requires a large amount of inventory to satisfy their long term customers.  The main customers are repair shops, auto dealerships and they do sales to consumers.  The business also sells on the internet thru its eBay store.  The business is known for its ability to source parts from multiple suppliers and to locate parts unavailable from other wholesalers allowing for competitive prices along with obtaining good margins.

 

FACILITY: The business operates from a 5,045 square foot facility that includes an office and a large warehouse with two docks and two drive-in bays. Lease expires in June 2013 with an option. This business could be re-located into a smaller warehouse; owner suggests a 3,500 square foot facility would be perfect.

 

EMPLOYEES: The business operates with the owner and 1 part- time employee. The business could use a full-time marketing / sales person. The Owner is willing to continue working in a warehouse management position.

 

GROSS SALES: 2012 sales were approximately $400,000; 2011 were approximately $420,000. Cash Flow was approximately $48,000 in 2012.

 

ASKING PRICE:  The owner is asking $80,000 plus inventory.  Included in the sale is about $25,000 of equipment.  Inventory is valued at $95,000.

 

REASON FOR SALE:  Lack of working capital.

 

 

IMPORTANT NOTICE: The above information has been provided by the Seller. Neither The 20/20 Group, Inc. (d.b.a. Opportunities In Business) nor it’s agents guarantee it’s accuracy or comprehensiveness.  7734 b. k.