Expanding by way of acquiring an existing company is a tried and tested way of growing your business. You can achieve fast growth through acquiring a competitor, by moving into new sectors that compliment your core business, or by broadening your reach in new locations or online –whatever your aim, a well-managed acquisition can help you to achieve your goals. Here are a few things to watch out for on your journey:
Set your strategy
Growth in business is great –it shows that your business is succeeding and that you can identify the potential for further success. However, without a defined strategy that growth could be detrimental to you and your overall goals. Decide what you want to do with your acquisition(s), and stick to that aspiration without emotional attachment. Some common drivers for acquisitions are:
Vertical integration –purchasing a business that supports your current company. A key supplier would be one example, or you could buy the company that distributes your products.
Geographic expansion –turning one pharmacy business into two, then three, until you have a chain of outlets that has something approaching a monopoly on a region.
New products –purchasing a business that can work in concert with your current business, with new supply lines, products, or distribution capabilities.So –if your overall plan is to vertically integrate your organization and leverage the better supply or distribution costs, then do not be tempted to buy the competing business in the next town over, just because it is for sale.
Prepare for the long haul
It is very rare for the transaction of a business to happen in just a few months, so you need to be prepared for a long and drawn-out process. As the buyer, the bulk of the time will probably be spent on duediligence –the part where you assess, in detail, the assets, liabilities, growth plans, and finances of the target company. It can be easy for the potential buyer to become emotionally invested during a lengthy process as you begin to plan your company future around the transaction going through, but this is a mistake as you will then find it easier to overlook what should be obvious red flags and weaken your own negotiating position through your desire to get the deal done.
Leverage external expertise
You will inevitably need to use some sort of external expertise to complete your acquisition –lawyers and accountants, for example. You should also use an experienced mergers and acquisitions consulting team, as they will be able to help you through each stage of the purchase process and make sure that everything runs smoothly.Pinnacle Pharmacy Group are experts in mergers and acquisitions activities specifically relating to the digital health and pharmacy business sectors –we know the intricacies of transactions involving these companies, we stay on top of the changing regulations, and we can provide you with all the help you need to complete your deal.
