Business Owner Resources

Acquisitions have time and again proven to be excellent avenues of growth for a business. However, as a founder, preparing your business for buying another company can be a daunting task when attempted alone. The fear of a culture mismatch, working with a whole new group of employees, lack of capital, or integration risks are often enough to keep many business owners from taking that next step.

Luckily, with the right information and ample support from trusted management and advisors, planning an acquisition strategy is easy – and, in our opinion, fun. With ample M&A expertise and experience under our belts, our team is designed to fuel our partners’ acquisition strategies.

While there’s no set guidelines on how to develop an acquisition strategy, there are a few key components every founder should be prepared with:

Your Business

Conducting an internal review of the business is a key first step before pursuing an acquisition. Take a look at your company’s performance in the last 3 years; do you have the right team in place to run the day-to-day business while you assess acquisitions?

Though the numbers tend to vary, we’ve found that businesses with $20 million+ in revenue and/or 8–20% EBITDA margins are typically in a comfortable position to make an acquisition.

Another common benchmark used to evaluate a business’s operational performance for an acquisition is the strength of the management team. Here’s what we look for in a “strong management team”: the business should have…

• A CEO who has built a strong management team and has a vision


• A CFO or strategic controller who can assess a target’s financial profile and identify areas of value

We recognize that many growing companies may not have a sophisticated controller. However, once a business starts to hit key financial goals, a CEO who knows the market, a CFO who is comfortable consolidating financials and building a pro forma of a combined business, and an operations manager with integration experience are critical to fueling an acquisition strategy.

The Market

Once the business begins to hit desired financial marks, industry studies will be your friend in developing a strategy and identifying key players and potential targets. Understanding how many options you have and how fragmented your market is will fuel that strategy and the decisions your business makes.

M&A typically makes sense in highly fragmented industries. In these industries, one or two key players may occupy 20-30% of the market. The remaining percentage should consist of many smaller players ($4-5 million in revenue) that bring unique value to the markets they serve.

Fueling an Acquisition with Georgia Oak

Deciding to make an acquisition is a huge milestone for any business. Whether you’re increasing your product line or spreading your product to more markets, an acquisition could have a massive impact on the growth of your company. Taking a big step does come with risks and obstacles, however. These gray areas are where a partner might make sense.

Many founders hold off on acquisitions to avoid potential misalignment between the culture of the two businesses. This is a valid concern – the culture of a buying company is incredibly important to the success of a merger or acquisition. However, with the support of trusted management and advisors who are aligned with a founder’s vision for a merger and have the ability to execute on that integration, the risk of a clashing of cultures is heavily mitigated.

One of the most common obstacles businesses face in developing a strategy is a lack of capital to make the acquisition. In addition to providing the needed capital to support a business’s acquisition strategy, advisors like Georgia Oak provide years of institutional M&A knowledge to guide the process and inform the strategy.

Bringing a trusted expert advisor onboard for an acquisition can increase the impact of its benefits, mitigate potential risks, and answer pertinent questions.