Is it Time to Do That Acquisition?
“Patience hell; let’s kill something” – quote from famous image of two hungry vultures
At times, I think we live to repeat history over and over again. Unfortunately, many of us only see with hindsight and not what is happening in the present. How many of us today look back to the 2007 – 2008 time and admit that we should have taken all of our money and invested in stocks (remember GE at $7) and been part of the remarkable gains since then? As usual, we realize it now when the best is perhaps behind us.
Many discussions I have with clients and prospects these days have a slightly different spin… “Had I only pulled the trigger and acquired that target – I would be so much better off today.” Well, I have news for you – I think there is still a chance to do a successful deal. Here is my gut reaction as to why.
First, I don’t know about you but if I have another conversation about the “new normal” I think I am going to vomit. It is tough to take anemic growth rates that are so low, an extra workday this month versus the same month last year accounts for all of your growth. How painful is it trying to assess progress that is so small, the tools we have can’t even measure it? What about being congratulated because your break even results are an improvement over past performance? All of this is wearing on the patience of many entrepreneurs and this pent up frustration is leading them to think like these two vultures.
There is no doubt that your competitor or that target is probably sensing the same malaise. And, while there is a good chance that the cost to acquire them may be higher than it was a few years ago, back then most felt their financial performance was at an all-time low so there was no motivation to even consider a transaction. Well, most are now through that soft period and many are singing the famous Peggy Lee song “is that all there is?” This, my good friends, can lead to the motivation to do something or what we refer to as a burning platform.
There is also a major factor working in your favor… the lending environment. Interest rates have never been lower, the cash available at banks and investment funds are at record levels and with such strong competition for good deals, terms are as “borrower friendly” as we have seen for a long time. We are seeing transactions close in reasonable time frames and robust activity is being reported especially in the lower end of the middle market.
So, if expansion and growth are in your strategic plan and you find yourself wondering if the time is right, I would encourage you to go after that deal and execute the transaction that will take your company to the next level. And, please remember to get the right professionals to help along the way.
