How to kick-off an inorganic growth strategy


Watch the webinar ‘A CEO’s Introduction to Acquisitions’ for an in-depth look at this topic.

We’ve written before about how opportunism isn’t a comprehensive strategy for companies looking to source acquisitions, even if you don’t have an aggressive goal.

But without a corporate development officer, how should busy CEOs focus their limited time?

“To get the most bang for your buck” when sourcing acquisitions, says Stenning Schueppert, currently managing director at CenterGate Capital and the former SVP of Corporate Development & Strategy at Total Safety, “the key is to find a very strategic deal.”

In a previous article, Schueppert mentioned the top three questions that determine any deal’s strategic value:

  • Will this deal help you grow or supplement your geographic footprint?
  • Will this deal help you sell a new product line, capability, or service?
  • Will this deal add to market share?

A strategic deal checks at least one and ideally more than one of these boxes. So how do you find the correct targets? Often, especially if you’re just kicking off an inorganic growth strategy, the ideal transaction might be right in front of your nose. Schueppert recommends starting by considering a few of the following key questions which all relate to Porter’s Five Forces:

  1. Who do you think are your biggest competitors?
  2. Who did you just lose your last three bids/projects to? Who did you just win your last three from/against? (These are actually your biggest competitors.)
  3. Who has the best salesperson in your industry or market?
  4. Where did your last five employees get recruited away to? Where are your last five (or best) employees from?
  5. Who just designed a new hot product in your space?

“It’s the KISS principle,” says Schueppert: Keep It Simple Stupid. “It’s not rocket science — this is stuff that is intimately knowable by your sales guys, your executives, your HR department, by the guys on the shop floor. It’s common sense.”

But executives can sometimes get bogged down in details. Surprisingly often, Schueppert says, “I’ll talk to executives and ask them about their competition, and they’ll either say they don’t have any or they won’t know who it is. Everyone has competition, and everyone should know exactly who they are.”

Start by looking at those businesses, and analyzing which ones might be able to offer you the most valuable synergies.

Says Schueppert, “Whether you’re winning or losing contracts from someone, they’re clearly still a competitor. And if you merge forces with that organization, you can stop beating each other up on contracts. If you’re losing to them, you may look at the acquisition for strategic, possibly defensive, reasons. If you’re winning from them frequently — and they know that — you have the leverage and your purchase price for that organization is much more likely to be on the value side of the equation. But again, remember, in all cases: is one plus one at least two? If not, you’re back to simply creating a holding company and that will destroy, not create, value.”

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

Predefined Skins

Primary Color

Background Color

Example Patterns

demo demo demo demo demo demo demo demo demo demo

Privacy Policy Settings

  • Required Cookies
  • Performance Cookies
  • Functional Cookies
  • Advertising Cookies
These cookies are essential in order to enable you to move around the Sites and use its features, such as accessing secure areas of the Sites and using Vistage’s Services. Since these cookies are essential to operate Vistage’s Sites and Services, there is no option to opt out of these cookies.
These cookies collect information about how visitors our Sites, for instance which pages visitors go to most often. These cookies don’t collect information that identifies a visitor. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

Cookies used

Visual Web Optimizer
These cookies remember information you have entered or choices you make (e.g. as your username, language, or your region), and provide enhanced, more personal features. They may also be used to provide services you have asked for such as watching a video or commenting on a blog. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.

Cookies used

Google Analytics
GTM
Gravity Forms
These cookies are used to make advertising more relevant to you and your interests. The cookies are usually placed by third party advertising networks. They remember the websites you visit and that information is shared with other parties such as advertisers. If you do not allow these cookies, you will experience less targeted advertising.