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I often get asked by Peninsula members about when is the right time to think about making an acquisition.

Many companies start out with high year-on-year sales growth but get to a point in their development where organic growth begins to level out. One option is to look at acquisitions to boost this slowing sales growth.

Tread carefully. It’s important not to see acquisitions as a substitute for organic growth. Focus on developing your core business and constantly finding new ways to boost sales rather than looking elsewhere. If you do decide to make an acquisition, it should supplement organic growth rather than replace it.

Due diligence is essential. Remember that a lot of businesses “dress up their shop windows” to boost turnover and profit to make their performance look better than it is. Be meticulous in checking the books and take expert advice before making any decisions.

Remember that a badly performed acquisition can be incredibly costly to your business. It may overload your business with too many customers and demands. Integration of systems, cultures, employees and products can be immensely complicated. Customers can be alienated extremely quickly through a fall in service or product quality. You’ll have the added burden of advisors’ fees and internal management time spent on the deal. All these factors should be carefully considered before making a move.

Don’t buy for the sake of it. Bigger is not necessarily better. Be strategic in your thinking. If you can find a business at the right price; one that fits with your values without compromising your core services, then an acquisition may be the right way forward.

And never, ever overpay. Have a figure in mind that you are willing to pay—not the market price, but your price—and stick to it. A bargain is only a bargain if you’re going to get value out of it. Otherwise, however cheap it is, you’re wasting your money.

Be wary, be strategic and be uncompromising on price. Acquisitions can be beneficial—but the ones that pay off are very few and far between.