How do you know whether or not making acquisitions is a smart decision? Here are three success factors to consider:
- Know the risk of the customer base you are buying. The due diligence process is critical. This includes predicting the future loyalty and growth of the customer base, in addition to understanding historical trends.
- Find the hot-spots. An acquirer doesn’t have to know every single area that needs improvement within the target company, but having indicators of weaknesses or hot-spots will give a clear indication of whether or not that company is a good fit.
- Use customer input in determining the integration strategy. Voice of the Customer feedback can help the acquirer to understand the strengths and weaknesses of the target firm; comparing this to a similar analysis of the acquiring company can identify leverage points that will increase the probability that the acquisition will be accretive in an accelerated fashion.