Acquisitions can be a game-changer for businesses looking to scale rapidly. However, broaching the subject with clients requires tact, timing, and targeting the right audience.
In How to Double the Size of Your Client’s Business Overnight! Kirsty McGregor discusses how as an accountant or business advisor, your role is not just to crunch numbers but also to guide ambitious clients through strategic growth opportunities like acquisitions.
Identifying the Right Clients
Before you even start the conversation about acquisitions, it's crucial to identify which of your clients are suitable candidates. Look for these key traits:
- Ambition: Does the client have aspirations for more wealth, a bigger lifestyle, or professional growth? If they're content with their current status, they may not be open to the risks associated with acquisitions.
- Energy: An energetic business owner is one who is still passionate and driven about their business and life. They are more likely to embrace the challenges of integrating another business.
- Openness to Delegation: Owners who understand the value of a management team and are willing to delegate are better suited for acquisitions. They are more likely to successfully manage the increased scope of operations post-acquisition.
Starting the Conversation
The approach should be subtle and gradual. Begin by sending your clients links to businesses for sale, ideally within their sector, to plant the seed of acquisition. This indirect method allows them to consider the idea without feeling pressured. After a few such nudges over several months, if they show interest, you can move on to a more direct conversation.
The Process of an Acquisition
Once your client is warmed up to the idea, educate them on the acquisition process to demystify it and address any apprehensions they might have. Here’s a simplified outline you can share:
1. Strategy, Identify and Approach: Define why the acquisition is being considered and what the ideal target business looks like.
2. Negotiation to Heads of Terms: Engage in early-stage discussions with the seller to agree on preliminary terms. Draft a plain English document outlining the agreed terms, which serves as a reference point for both parties.
3. Due Diligence: Conduct thorough investigations into the target business to ensure everything is as represented.
4. Financing: You may have to get involved with funding the deal, depending on how its structured. So if there is some requirement for raising finance up front then you will need to get involved with that.
5. Legal: Work closely with lawyers to refine the terms, draft legal documents, and eventually sign off on the deal. Consider the operational aspects, such as potential redundancies, integration costs, and how the businesses will merge operationally and culturally.
Remember, acquisitions are not just about financial gain; they're about strategic growth and the evolution of the business. Ensure your clients understand that while there are risks, with the right strategy and support, those risks can be mitigated, leading to a successful expansion of their business.
When discussing acquisitions with clients, focus on those who exhibit ambition, energy, and a willingness to delegate. Educate them on the process, take it slow, and ensure they understand both the risks and the rewards. With the right preparation and guidance, acquisitions can indeed double the size of your client's business overnight.
For the full session, please click here. In this course, Kirsty McGregor covers the following topics:
- How to have the conversation about acquisitions – and who with
- The process of an acquisition
- How we mitigate the various risks for clients
- Understanding the best acquisition strategy
- Finding the targets & making the approach
The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.