Many acquisition opportunities are unsolicited, typically originating with an investment banker representing the seller. Oftentimes these situations are time sensitive, with the sale being effected through some variant of a controlled auction. This is, in fact, one of the reasons a well-developed, M&A process is so crucial…...it allows companies to respond quickly and intelligently to unsolicited opportunities.
With that said, being good at M&A also entails proactively creating acquisition opportunities. This involves two primary elements:
- Building Relationships with Potential Candidates- Companies that are good at M&A identify the best acquisition candidates and proactively build relationships with them over time. Depending on the competitive context and strategic objectives, these relationships might include joint ventures, marketing arrangements, integrated supply agreements, etc. The aim is to build a relationship while getting a better feel for the capabilities of the candidate.
- Establishing an External Network- In addition to building direct relationships with acquisition candidates, skilled acquirers establish meaningful dialogs with the investment banking and private equity industries.
