Last month we talked about "Imaginary" synergy. This month we want to talk about real synergy.

Execution is the hardest part of any endeavour. It is easy to plan, it is easy to start, it is hard to finish. One business person I know had a sign in his office "Ideas are good. Deadlines are better."  Executing on synergy identified in an acquisition involves following through on several steps:

1)  Identify the synergy - is it marketing or operational?  If marketing, are you sure it is real, and not just in your mind?  If operational, is it based on:   

• Real estate?
• People?
• IT systems?
• Logistics?
• Supplier relationships?
• Other?
• A combination of the above?

3) Action Plan to change - whatever the source of the synergy, you need to plan how you are going to change marketing/operations in order to capture it - without negatively impacting any other aspect of the business.

4) Track it - make sure you capture the synergy by having a method to track the savings after the fact. Any variation (on amount or timing) should be investigated.

Need a second opinion on your potential acquisition or how to maximize its potential? Contact us at 204-478-7266x110.

The sale of a business can be likened to courtship and marriage - what you disclose and when is an essential element of the process. Give away too much, too early, and the "ardour" may cool off. Hold back too much, and the buyer may not be able to gain a full understanding of the business, it value, or its potential.

At some point, you will need to reveal all. This is always uncomfortable for the seller, but at some point, the buyer needs to finalize "due diligence" and move to close the deal.

In general, the process follows these main milestones:

1. Buyer signs first confidentiality agreement to get basic information on the business - name, address, business information package, including summary financials.
2. Buyer indicates interest to pursue further by providing a letter of intent or an offer to purchase. This letter will be subject to certain conditions, typically financing and "due diligence." It will also typically re-confirm the original confidentiality agreement and/or include clauses that protect the seller further.
3. At this point, to satisfy due diligence, the buyer will want to review financial statements, tax returns, and other sensitive information. Both parties are starting to incur accounting and legal costs. So it is important to have a basic understanding of the general agreement as spelled out in the Letter of intent.
4. The issue of client lists always arises. Sellers probably don't want to reveal them at this point, but, depending on the type of business, buyers may need to know this level of detail. This is typically discussed as part of the LOI process.