Ockham nexus3/5/2023 ![]() ![]() The third thing to consider: is the situation a financial fit? Can you afford to buy the business? Do you need to finance the purchase? Is the company weaker financially than you had thought? Ultimately, what is the seller willing to accept for the sale of their business? Once you have identified both a strategic and cultural fit, the seller will be on board, which in turn means that both parties want to reach an agreement, so potentially messy financial discussions should go easier. You want to find a company that shares the same business values, processes, and policies. Therefore, make certain that you spend time on financials and exit discussions, but do not forget about the business culture. I quickly realized that we were not going to fit with this company culturally: we said hello to each other in the hallways, had a much stricter work presence policy, and did not have an entertainment room. In addition, they had a flexible work-from-home policy, and, had a play room for the employees. There was very little energy in the building as most team members kept to themselves. I remember meeting with a certain owner, and as we toured the office he was not greeting the employees-and they were not making attempts toward him either. In this way, you can get a good feel for the company’s culture. The second thing to consider: can you integrate culturally? Some might think this is putting the cart before the horse, as you have not made an offer and preformed due diligence therefore, how can you know the culture? In speaking and meeting with the owner prior to making an offer, focus some of your questions on how they run their business, treat their employees, manage their employees, and most importantly, try to understand the CEO’s background and personal life (spouse, kids, etc.). What are your strategic needs? Who do you know that has what you need? What do you have that the target does not have? Your strategy should not be just to grow, but to acquire an entity that is going to help you provide more value to your client and the marketplace. In short, this was an excellent symbiotic strategic fit. On the other hand, it was a good fit for them as well: Nexus had a very small presence in the US, did not possess a clinical data piece (we did), and lacked cash to grow. My company, Ockham, had not yet expanded to Europe, and we also needed additional Oncology expertise and clinical divisional strength. The first thing to consider: is it strategic? When the company I formerly led targeted Nexus Oncology for acquisition, we knew they were a strategic fit: they were a mostly European CRO (contract research organization) doing clinical trials in Oncology. It is true that price is important, but the optimal way to approach a target is to test the company in terms of strategic fit, cultural fit, and financial fit–in that order. ![]() Unfortunately, you will waste a lot of time with this method. Focused solely on price, off you go to find some company that you believe will be a great fit. Some target companies are geographical fits, others will provide vertical market expansion, and others will simply make your business bigger. As a smaller business with no M & A team, you begin the journey without a formal process instead, you follow your gut to “get something done.” The One Mistake and The Three Fits You want to spend a certain amount of money and feel pressured (perhaps by your CFO and board) to pull off the deal of the century. You know your competitors and begin to target some for discussions in addition, you research other companies and could aim for those as well. You might even be sitting on some cash, or, have the capacity to leverage cash to execute a deal. As a buyer, you could be looking to grow your business through acquisition. ![]()
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