Buy a business

HOW NOT TO BUY A BUSINESS

• Have a strategic grand design and make it a ‘must’ - by definition that excludes all other possibilities.
• Never review the strategy - and don’t promptly modify or scrap plans if events contradict them.
• Make sure that the strategic buy plays not to your strengths, but to your weaknesses.
• Increase the initial risk exposure by unplanned pre- and post-acquisition initiatives - like raising the price.
• Take external and internal approvals of the strategic stroke as confirming its rightness - and always ignore Cassandras, internal or external.
• Don’t let anybody lower down criticise the strategy or the buy, and over-commit top management to the deal
• Apply the buyer’s accepted rules and routines - without their being checked for relevance.
• Discourage messengers from bringing bad news - and ensure that corrective reaction to bad news is dangerously delayed.
• Do not admit failure: rather, deny it.

HOW ACE BUYERS BUY A BUSINESS

• There’s no grand design; the deal is strictly opportunistic, and disposals of unwanted bits are briskly made.
• The business strategy is highly flexible, and, after disposals, largely left to operating management.
• The purchaser is only interested in the buy’s strengths, and acts swiftly to eradicate weaknesses and weak operations.
• Post-acquisition management follows a model developed from experience, designed to narrow the already small risks.
• The acquirer is only interested in external and internal approval to the extent that approval helps or hinders the capture of the target.
• Top management is committed only to the economic success of the deal.
• The rules and routines applied to the new situation have worked in many takeovers and situations.
• Bad news produces immediate and effective correction.
• Failure is not excused; the acquisition has to meet the purchaser’s simple, clear and comprehensive purpose: to make money.