The Best Management Consulting Advice Ever Assembled?

Posted by Matt Lumia on Tue, Nov 06, 2012 @ 09:17 AM

21 Leaders and Luminaries Speak Up on Wisdom That Got Them to Where They Are

Author: Matt Lumia

business adviceI was really intrigued by an article in the last issue of Fortune Magazine titled “The Best Advice I Ever Got”. (Fortune, “21 Leaders and Luminaries on the Best Advice They Ever Got” (11/12/2102))

The article summarized the one piece of wisdom that 21 luminaries from all walks of life received that they felt helped them get to where they are today. While I’m not sure that I necessarily agree with all of these, I thought they’d be interesting to share with our blog readers.

Leave your comments below: What’s the single best piece of advice or wisdom they you got that helped you on your path?

"You need to hire extraordinary people" -  Mindy Grossman, CEO, HSN

"Nobody Knows nuthin’" - Jack Bogle, Founder, Vanguard Group

"There’s no shortcut to success" - Ron Johnson, CEO, JC Penney

"You have to think about the type of person you want to be after you’re done with this experience" - Scott Griffith, Chairman, Zipcar

"If your business isn’t the best quality, it will not succeed" - Tracy Reese, Fashion Designer

"What you’re really good at is creating a new technology and bringing it into the world; but there are other people who can bring it to a world market" - Ray Kurzweil, Futurist and inventor

"The best thing you can do is to use data to enhance your description of the world" - Eugene Fama, Economist

"It’s not what you know but who you know" - Ron Conway, Super Angel

"The best advice is often the most painful advice and you have to trust the person that’s giving it to you" - Beth Comstock, CMO, General Electric

"Failing simply leads you to the next great thing" - Sara Blakely, Founder, Spanx

"Anyone worthy talking to is worth listening to" - David Boies, Founder, Bois Schiller & Flexner

"You can’t always control what happens to you in a game or in life, but you can control how you respond – you should never quit" - John Hickenlooper, Governor, Colorado

"Jump right in" - Lori Goler, VP Human Resources, Facebook

"To live old you first need to live young. It’s better to be alive and a little weak than be dead in good health" - Phillip Bourguignon, CEO, Exclusive Results

"Break new barriers all the time" - Magnus Carlsen, #1 Ranked Chess player in the world

"Worry about the things you can change and don’t worry about the things you can’t" - Victoria Ransom, CEO, Wildfire

"You should  be an architect because you can always be an artist in architecture, but you cannot be an architect in art" - Daniel Libeskind, Master Architect, World Trade Center

"You can do the impossible. It is miracles that take a little longer" - George Logothetis, CEO, The Libra Group

"If you are going to work for me, the most important thing is that you show up on time" - Anthony Bourdain, Chef, Author, Provocateur

"Treat other people like you want to be treated" - Barry Black, Chaplain, U.S. Senate

JC Jones & Associates is an award winning business consulting firm recognized locally and nationally for our work product and business ethics. For more information on how we can help you improve your business, call us at 877-899-4072 or contact us here.

Tags: business performance, business management, business profitability, Matt Lumia

Develop a Customized Succession Plan Based on Facts, Not Assumptions

Posted by Matt Lumia on Mon, Oct 15, 2012 @ 09:18 AM

A Business Valuation is Key for Drawing  a Roadmap Based on Reality for Your Exit Plan

Author: Matt Lumia

business valuation“The majority of baby-boomer wealth is held in 12 million privately owned businesses, of which more than 70% are expected to change hands in the next 10-15 years.” (Robert Avery, Cornell University)

And yet, the majority of these business owners have not begun to plan how they will accomplish that transfer. Unfortunately, this also means that they may not be maximizing the value of the business for themselves and their heirs.

A baseline business valuation is an essential first step for owners who are just starting to weigh their options for exiting the business – not just when they are ready for a sale or transfer of shares.

Through an objective evaluation of the strengths and weaknesses that are affecting the value of the business, a business valuation often reveals surprising realities that allow business owners to develop a customized succession plan based on facts, not assumptions.

That baseline valuation should be conducted no less than three years before the planned exit. By undertaking this step even earlier – five or more years prior to exit – you give yourself even more time to adjust course based on the strengths and weaknesses revealed by the valuation.

Following are some of the realities that often surprise business owners:

  1. The value of the business may have changed due to economic conditions and demographic shifts. Many business owners have a number in their head of how much the business is worth. But valuations can be affected by many factors that are external to the business, from interest rates to unemployment rates. Business owners also tend to overlook the effects of changing demographics. The market for your product may have shifted to a different region, or there may be stronger demand from a different industry than the one you are currently targeting.
  2. What’s it worth? Depends on who’s asking. A strategic buyer – such as a competitor who would be able to capitalize on significant synergies between the two businesses – would value the business differently than would a private equity fund or your own family members. The business assessment that is an essential part of the baseline valuation will identify who the potential buyers are, and what specific value your business holds for each one.
  3. The next generation isn’t ready for a transition. If you’re like most closely held business owners, you perform many of the leadership functions in the business. You might assume that management or the kids are ready to take over the reins, but getting an objective assessment of the readiness of the management team can reveal a completely different scenario.
  4. You aren’t ready for a transition. Until now, you might have thought of transitioning the business as a theoretical thing: “One day, when I’m ready to retire…” Taking the first step of conducting a business valuation can make it a little too real. This is a good time to do a gut check and assess how much your identity is tied to the business before you move forward.

All of these realizations that come out of the business valuation inform the path you decide to take toward the exit, which means you need to make sure that you are working with dependable information. That’s why you want to be sure to engage an experienced business valuation expert who understands the nuances of family business valuation.

If you’re ready to start exploring your exit options, contact JC Jones & Associates or call (877) 899-4072.

Tags: Business valuation, business exit strategies, Succession planning, Matt Lumia

Family Business Value Drivers

Posted by Matt Lumia on Mon, Oct 08, 2012 @ 09:13 AM

Four Ways to Increase Value By Decreasing Risk

Author: Matt Lumia

family business value driversWhether your plan is to sell your company on the open market, to management, transfer it to your children or even launch an IPO, the ultimate goal is to improve the value of the family business so you have the most options when you’re ready to exit.

So what can you do now to increase the value of your business? Remember that value is based on return in relation to risk. If the buyer can get a higher return on investment while minimizing risk, the valuation increases.

Following are some areas where you can reduce risk, ultimately increasing the value of your business to a potential acquirer:

  • Stabilize income. All else being equal, a business with consistent cash flow is worth more than a business that shows wild swings from one year to the next.  So an owner looking to increase the value of the business should pay attention to the two primary factors that affect volatility:
  • Diversity of the customer base. If you have one main customer, or just a few that comprise the bulk of your customers, you are much more vulnerable to the loss of one customer, making future cash flows more tenuous.
  • Length of customer contracts. Long-term contracts contribute to stability of income and therefore higher value than do many transactional relationships.
  • Evaluate reliability of vendors. Just like with customers, long-term relationships with financially stable vendors are viewed more positively than short-term, transactional arrangements. It’s important to align yourself with the right vendors – not necessarily the cheapest vendors. This is especially important if your product’s competitive differentiator depends on the vendor’s specific expertise.
  • Strengthen management team. A strong management team is an important value driver for any buyer that plans to keep all or part of that team in place. It is important to get that team on the same page regarding the succession plan and put the right people into the right roles. In a closely held business, this discussion has the potential to cause hurt feelings when one family or key management member is promoted ahead of another. But by getting everyone to see the shared goal of financial security for all family members, you can help the family move forward with the plan to increase the value of the business.
  • Improve efficiency of operations. The greater the efficiency, the higher the cash flow, the higher the valuation. Many family businesses have been operating with the same processes and technology for years or even decades. Antiquated systems can bog down workflow, financial reporting and customer service – all contributing to a less valuable enterprise.

Evaluating and maximizing these value drivers requires an objective and critical evaluation of the business – something that is hard to do when the business is close to your heart.

For a confidential discussion about your family business and opportunities to increase value, contact JC Jones & Associates or call (877) 899-4072.

Tags: Business valuation, Succession plan, value-based management, Matt Lumia

Six Keys for Making Your ERP System Implementation a HUGE Success

Posted by Matt Smith on Tue, Oct 02, 2012 @ 09:13 AM

Successful ERP Implementation Requires Commitment from Management, Team, Vendors

Author: Matt Smith

ERP system implementationNow that you’ve made a decision to implement a new ERP system for your business, your approach and processes for implementing the system are critical to its success.  The implementation process is full of challenges. After a significant investment in software, you now need to invest in people, processes and other resources that will generate the return on investment you’re seeking while meeting the key implementation goals of on time and budget.

Over the course of dozens of ERP system implementations, I’ve learned from my battle scars! Here are six keys related to leadership, vendor management and planning that represent some fundamental guidance for a smooth transition into a new ERP system.  

Leadership Needs

If management and staff aren’t committed to the project, the chances of success dwindle severely. Here’s how your team leadership structure can set up successfully achieving your goals:

  • Support from management: Management has to commit to moving the project along (Priority, Resources). Application of a new ERP system is bound to have a few obstacles along the way, and the Project Sponsor (senior manager) needs to provide oversight. This would include sorting out any issues that may arise, such as conflicting user requirements / process.
  • Project has a capable Project Manager: Day-today leadership is critical. The project manager needs to be in charge of the project from the very beginning. This person should be committed to helping the team (users, IT and vendor) overcome hurdles while working through the process.

Vendor and Planning

We’ve talked about the challenges of selecting a vendor for your ERP system. It’s very important to consider how your vendor or consultant will impact your chances of succeeding with your implementation.

  • Don’t Rush Planning: The goal of a vendor is to sell, and this may mean a rushed planning process. Take the time to go over all of the components of the project plan and consider assumptions used versus ability to execute. For example, what has the vendor used for assumptions around company staff participation?
  • Get to Pick Your Consultants: The vendor resources are important to project success, for example they lead in finalizing and configuring the software to fit your business. Don’t assume you have to accept the vendors suggested consultants. Require that you have the right to interview and accept / reject candidates. It’s much better to get the right team up front versus changing out consultants during the project.

Planning Tips

Any new system needs a good plan in place in order to be successful. Your team should consider these tips when moving forward:

  • Focus on Your Business: Your business is the reason you’re getting a new ERP system to begin with. Make sure that the business is committed to the project and the system is configured to align with business goals. With this focus you will ensure that your organization achieves ROI goals.
  • Emphasize Training for All Users: Consider the management and staff who won’t be part of the implementation team. Often training is rushed to achieve a pre-determined cutover date. Cutting corners on training can be very detrimental to success at “Go Live”. Establish a training approach up front in your project plan and stick with it when it comes time to execute the training plan.  With a fully trained user group success will be ensured.

Implementing a new ERP system can be a challenge, and we can help you develop, manage and navigate through the process. Contact us here to learn more or give me a call at 585-899-4072.

Tags: Enterprise Resource Planning, business management, IT strategies, IT strategic planning, Matt Smith, IT infrastructure, IT assessment, ERP System, performance improvement

The Heart of Successful Strategic Planning

Posted by Jack Canty on Tue, Sep 18, 2012 @ 09:12 AM

Allocate Resources to Turn Plans into Reality

Author: Jack Canty

When strategic plans fail, it is typically because of faulty execution.

Does this sound familiar?

Acme Inc.’s executive leadership convenes for their year-end strategic planning retreat, and they agree on three key initiatives for the new fiscal year. But when it’s time to put those ideas into action, doubts surface about whether those initiatives really are the right opportunities right now. Because of those doubts, Acme managers never deploy the resources necessary to get the initiatives off the ground, and the prevailing sentiment is that “strategic planning doesn’t work.”

This scenario is so common because most organizations fail to design an executable plan that leaders and employees can believe in.

The first step in designing an executable plan is to determine where those resources should be allocated. That step requires truly understanding market economics and competitive positioning, as we have discussed in previous posts.

The next step involves using those facts about the market and your positioning to determine how you can maximize value by allocating resources to focus on the highest value-creating activities and away from the least value-creating activities -- or those activities that are actually destroying value.

This is the heart of strategic planning. While you typically can’t change market economics (unless you’re Apple and you’re introducing the next iProduct), you can control your competitive position by reducing your cost structure, improving your offer differentiation, or both:

strategic planning

To execute on those strategies, you will need to allocate two types of resources:

  • Money. In addition to the capital expenses required to introduce or enhance a product, don’t forget about the costs to research and develop a new product and marketing costs to promote the product.
  • People. Every strategic initiative requires strategic leadership – someone to champion the project and marshal it through the stages of execution – as well as people on the ground who must develop, test and market the new or enhanced product.

Many organizations underestimate the people resources required to execute on a new initiative, which can create a huge hurdle when they must pull people away from other priorities.

Another hurdle often keeps managers from allocating resources to execute on the plan: a lack of communication. Every strategic plan must be accompanied by a one- to two-page plan that outlines how the new strategy will be rolled out to the organization – from senior leadership to regional management to every employee in the company.

By sharing the rationale behind the strategic plan with these stakeholders, the organization is empowering them to think strategically about their day-to-day responsibilities rather than reacting to the immediate demands of their staff and customers.

A well-executed strategic plan leads to improved value for all stakeholders. When management has confidence in the fact-based strategic plan and clearly sees how the plan is to be executed, those leaders will fall in line behind the chosen strategy and will make the resource allocations necessary to make that strategy a reality.

For their part, employees will feel energized and empowered to make decisions that are in the best interests of the company.

JC Jones & Associates has the experience, skills and passion to take your company to new levels. Contact us here or call us at (585) 899-4072 or (877) 899-4072 to find out how we can help you make your vision a reality.

Tags: Jack Canty, business performance, business management, strategic planning, resource allocation

Secrets of a Fact-Based Strategic Planner (Part 2)

Posted by Jack Canty on Mon, Sep 10, 2012 @ 09:17 AM

Know Your Competitive Position

Author: Jack Canty

Be honest with yourself: Is your product or service truly better than your competitors’?

After understanding your markets, knowing your competitive position is the next most important step to maximizing company value.

There are really only two ways to compete. One strategy is to have a cost structure that allows you to price competitively in the market. While every company must price competitively, if price is the only thing that differentiates your offering, then you’re a commodity that can be easily replaced when the next cheapest thing comes out. The other strategy, which is more profitable and sustainable, is to have a compelling differentiator that piques customers’ interest.

To determine the competitive position of each of your markets (whether a product line, a customer or a group of customers), ask the following questions:

  1. What truly makes us different than the competition?
  2. Why do customers buy from us?
  3. Are we more expensive, less expensive, or about the same price as our competitors?
  4. Are our customers and prospective customers willing to pay a premium for what we offer?

Objectively answering these questions will allow you to plot your key markets on a graph that looks something like this:

 strategic planning

This type of graph paints a clear picture of the markets where the organization has a clear competitive advantage (Market D) and those where the organization is at a competitive disadvantage (Markets A and B).

Combined with the market assessment, the competitive assessment allows an organization to make decisions about how to allocate resources. The problem is that most executives have an overly rosy view of their differentiation position. Everyone seems to think he has a better, faster or stronger widget. This is where a reliance on the facts will save the day. Look back at question No. 4 above: Are you able to command a premium for your product or service? If not, then do you really have a compelling differentiator?

If you’re looking for an experienced partner to objectively evaluate the competitive positioning of your products and services, contact JC Jones & Associates or call (585) 899-4072 or (877) 899-4072 for a confidential discussion.

Tags: Jack Canty, business assessment, business performance, business management, increasing cash flow, strategic planning, strategic pricing

Don’t Let Your Merger or Acquisition Crash and Burn

Posted by Bob Baker on Tue, Sep 04, 2012 @ 09:19 AM

Five Essential Duties of a CFO to Successfully Integrate a Merger or Acquisition

Author: Bob Baker

key to ma successAs a CFO, when your company does a merger or acquisition, you probably feel like you’re at the eye of the storm.

While you’re immersed in the details of vetting and negotiating a deal, don’t forget to plan for a successful integration. A study by Booz Allen Hamilton found that more than half of mergers fail to meet expectations, and the most commonly cited reasons include execution issues such as loss of key staff, culture clash, loss of key customers and a generally clumsy integration.

While a merger integration checklist might include hundreds of items, we think there are five essential ways a CFO can improve the chances of a successful integration:

  1. Understand the value of the deal. Is the value dependent on reducing costs by consolidating facilities or technology? Or is it based on the addition of a new portfolio of products? From an integration standpoint, these two deals will require completely different post-merger steps.
  2. Assign clear responsibility and accountability. While you are likely overseeing the integration process, it is not your responsibility to make sure the integration steps are accomplished. Assign an integration team with a strong leader, and make no secret about whose head will roll if the integration is a disaster.
  3. Identify key milestones. Of the hundreds of to-dos in an integration process, maybe a dozen are critical from a timing perspective. By failing to meet these key milestones, you will be jeopardizing the value of the deal. For example, if you’re consolidating factories, you may have a 90-day lease notification period. Late notification could mean that you will pay a significant fine to exit the lease. The same goes for a contract with a technology vendor. Another example might be the need to execute employment contracts with key employees. If those people walk, the value of the deal is diminished.
  4. Communicate. Assigning responsibility doesn’t mean walking away and trusting that everything is progressing on track. Schedule regular updates with the integration team – weekly at first, then monthly and eventually once a quarter. Schedule each of these meetings with the key milestones in mind. You want to make sure you have time to uncover and deal with any hurdles that might throw the integration off track.
  5. Be prepared to make the tough calls. When the integration is not progressing smoothly, the problem typically can be traced back to an employee who is causing problems. Whether it’s a manager from the acquired company who refuses to fall in line, or an integration team that isn’t getting the job done, you can’t shy away from making the personnel changes necessary to ensure your organization realizes the full value of the acquisition.

The integration process can mean the difference between realizing full value for your stakeholders or seeing mergers and acquisitions  crash and burn before it ever gets off the ground.

If you need help designing an integration process that aligns people, processes and technologies to maximize the value of the deal, contact your JC Jones advisor or call (877) 899-4072.

Tags: Bob Baker, merger & acquisition, m&a, integration

Cloud Technology and Your ERP Software Selection

Posted by Matt Smith on Thu, Aug 16, 2012 @ 09:17 AM

Should a Cloud Solution be in Your Future for Configuring and Implementing a New ERP System?

Author: Matt Smith

Cloud Technology and ERP Systems

Selecting an ERP system takes lots of analysis and planning, and can be full of challenges. One of these challenges is the introduction of cloud technology into the  ERP software market. In the past, businesses did not take cloud technology into consideration when selecting software, especially not for an ERP system. Nowadays, this is no longer true. Cloud technology is considered to be the “wave of the future” and now very re

levant for ERP systems. Considering a cloud ERP deployment needs to be front-and-center when selecting a new system.

What Cloud Computing Does

The evolution of the internet and advancing capabilities (connectivity, security, storage) has created the framework for Cloud Computing. Web based software has created the opportunity to easily access and use applications on remote servers with nothing more than an inexpensive computer and browser. The resulting platform drives third-party and private cloud solutions that are economical, scalable and extremely flexible for users. A cloud solution includes the ability to easily and securely deploy and manage application services.

The Advantage - ERP Cloud Computing Deployment

The primary focus / goal when evaluating ERP solutions is finding system functionality that fits your business. Once this objective has been met, the deployment question will arise. Should we run it internally on our own servers? Should we consider the vendor’s Cloud deployment offering? While these questions can be very different based on each company’s situation, it is clear that a cloud deployment brings some compelling opportunities.

  1. Reduced Up Front Costs – For Cloud options, ERP vendors base revenue on annual user subscriptions. When compared to a typical on premise investment, the up-front costs are typically much less. On premise deployment requires up front lump sum investment in software licenses and infrastructure. Also, traditional on premises implementations can require months versus weeks with significant expenditures for consultants for set up, training and configuration.
  2. Speed / Accelerate Time to Value – quickly create, deploy, scale and manage applications. As a result, the organization is using the application sooner with less IT resources.
  3. Reduce IT Spend – ongoing cost efficiencies result from cloud environments. Shared services maximize the utilization of IT resources (Infrastructure and staff).
    1. Eliminate server and related infrastructure upgrade costs.
    2. Avoid the complexity and costs associated with software upgrades.
  4. Scale and Elasticity – the ability to scale up and down based on business demand is a unique characteristic of a cloud environment. On demand cloud solutions and associated costs can scale as the volume dictates.
  5. Increased User Satisfaction - with easy to use, intuitive applications using graphical user interfaces (GUI), the cloud can be deployed easily with very little training. The result is a satisfied and quickly productive user. Also, access anywhere the internet is available makes for a more flexible and productive workforce.

What to Take Into Consideration While Shopping

An effective software evaluation and selection process will consider many factors. We recommend two key points when considering potential vendors and their ERP solutions.

  • When creating and distributing your Request for Proposal cloud computing whitepaper(RFP), indicate you want all proposals to include two options a) cloud platform and b) internal infrastructure.
  • Don’t eliminate a vendor because they ONLY offer one of the two approaches.  At the end of the day the functional capabilities provided with the candidate ERP solutions are most important.  (Note: ERP vendors are quickly positioning their product offerings to the dual deployment framework).   

When it comes to the important initiative of selecting and implementing a new business solution, your ERP system should be one that best suits the needs of your business. The consideration of cloud vs. traditional in house deployments is just one of many elements of the systems selection process.

If you have anxiety around the ERP selection process, that is very normal …. it’s a major undertaking with both high risk and high reward for your company. If you are actively considering a new ERP, we can help. For any questions on cloud technology or selecting an ERP system vendor, contact us here or call us at 585-899-4072.

Tags: software selection, IT strategies, Matt Smith, cloud computing, IT infrastructure, cloud computing strategies, ERP System

Secrets of a Fact-Based Strategic Planner

Posted by Jack Canty on Mon, Aug 13, 2012 @ 09:13 AM

Know Your Markets in Order to be Successful

Author: Jack Canty

Most of the CEOs and CFOs who come to us for strategic planning do so because they have failed in their past planning efforts. They typically fail for one (or both) of the following reasons:

  • The plan was, in essence, no more than wishful thinking
  • They weren’t able to focus organizational resources to execute on the plan

Fact-based strategic planning can alleviate both of these problems. In a previous post, we explained the pre-requisites for strategic planning. In this post, we dive into one of those pre-requisites: assessing your markets.

Remembering that your ultimate goal is to maximize value for stakeholders, the purpose of a market assessment is to determine how serving each market is contributing value. This assessment breaks down into two areas:

  • Is the market, in total, growing?
  • Does the average participant in the market make an adequate return on investement?

Answering these questions is both an art and a science. In markets that include public companies, you can draw insights from pro formas, 10-Ks and other publicly available sources. Several federal, state and local government agencies also compile economic and workforce statistics. Finally, many industry trade associations, such as the National Association of Manufacturers, conduct regular financial surveys and other research.

You can also find some clues in your own customer base and what you can observe of your competitors’ businesses. For example, have orders been increasing for certain types of products? Have your competitors purchased new capital equipment? By observing these trends and synthesizing them with your quantitative research, you should be able to plot each of those markets on a graph that looks something like this:strategic planning

In this graph, attractive markets that are profitable and growing are in the top right quadrant, whereas unattractive markets that are unprofitable and shrinking are in the lower left quadrant.

Seeing this data in living color can create some true “a-ha” moments for your management team and facilitate a more effective strategic planning effort. In the example above, the resources being deployed in Market A may not be driving maximum value for this organization, so management faces a decision of how to reallocate those resources more effectively.

But before we talk about resource allocation, the next step (which we will explore in our next post) is to assess where your company stands in relation to its competitors.

JC Jones & Associates stands at the ready to help you understand the market realities facing your business. Contact us here or call us at (585) 899-4072 or (877) 899-4072.

Tags: Jack Canty, business performance, business management, Succession planning, strategic planning

Battle Scars From the Mergers and Acquisition Wars

Posted by Bob Baker on Thu, Aug 09, 2012 @ 09:17 AM

Six Keys to a Successful M&A Battle Plan

Author: Bob Bakerm and a success

Why is it that more than 70 percent of all M&A activity fails to achieve the expected results? There are many reasons, ranging from incompatible cultures to a due diligence process that fails to disclose risks.

We think there are six keys to making sure the deals you pursue have the highest chances of success:

Have a good source for seeing deals. Without eyes in the field, you could miss an opportunity that would have been a perfect fit. If you don’t want to hire an investment banker or business broker to identify potential deals on your behalf, then equip your board members or sales and marketing organization with the knowledge they need to perform that function. And remember that, in addition to being aware that the company is looking for potential acquisitions, they will also need to know what to do with a lead once they have it.

Develop a clear internal screening process. Pursuing targets is time-consuming and expensive, and by spending too much time pursuing the wrong deals, you not only waste valuable time and resources, but also increase the possibility that you could miss out on the right opportunity. Internal screening criteria should include whether the target fits the company’s strategic priority and whether the acquisition will create value for the company. This is also the time for a gut check: Does this target seem like it will be a good fit, culturally? If you’re acquiring a smaller company, do you think the leadership will fall in line behind your company’s leadership, or will they constantly be a burr in the saddle?

Make sure you have the resources to get the work done. Doing deals puts a strain on your staff. Do you have the expertise and the capacity in-house to handle the many due diligence, tax-related and legal steps that must be completed? Also ask yourself if the organization will have the horsepower to run things after the dust has settled from the merger or acquisition.  If not then augment internal resources with external professionals.  Along with the adding specific expertise and expanding capacity, the professional brings an objective view to the deal which insiders close to the deal can lose.

Be crystal clear on the value that is being acquired. The value of a merger of similar-sized manufacturing companies might be that you can consolidate functions to reduce costs. The acquisition of an overseas distribution arm by a company that previously had no international operations will have a completely different value – creating a new revenue stream. If you don’t have a clear picture of the value up front, you can easily miss some crucial steps that will negate that value.

Make sure you have the tools to facilitate the process. Due to the number of moving parts in a merger, templates and checklists are essential. At a minimum, you will need:

  • A process flow that delineates the steps along the acquisition path
  • A valuation model that enables you to understand the target’s financial value
  • A short-form due diligence process
  • An integration template that spells out the post-merger to-dos

Take a breath before signing on the dotted line. It’s all too easy to fall victim to deal fever. Take some time before the final negotiation and ask yourself: Does this deal still make sense? This is the time to review the due diligence findings, get confirmation from the deal team that the deal will meet your financial and strategic goals, and evaluate whether the integration plan is realistic.

Sometimes the deal you don’t do is the best decision you ever made. If you need objective input evaluating whether a deal makes sense for your company, contact your JC Jones advisor or call (877) 899-4072.

Tags: business assessment, Bob Baker, business management, merger & acquisition, m&a