Why Agility Matters When Evaluating Acquisitions

“Success today requires the agility and drive to constantly rethink, reinvigorate, react, and reinvent.” ~ Bill Gates

As the owner of a privately-held business, wouldn’t it help to know what PE firms look for in a potential acquisition?

Just like many businesses, Private Equity (PE) firms and their portfolio companies have experienced first-hand the pandemic-fueled financial crisis. While some were eligible to receive help from the CARES Act, other firms did not fit the criteria and could not qualify for forgivable loans.

With uncertainty still shadowing the immediate and distant future, many PE firms have been seeking opportunities in a low-asset environment, while searching for new portfolio businesses and navigating through more possible lockdowns and economy shutdowns.

A recent article by Mergers & Acquisitions, discussed the importance of agility in today’s business landscape. The companies that respond quickly to changes, discover new business and entrepreneurial opportunities, and become more innovative are more attractive to potential buyers.

PE firms look for companies that have withstood the pandemic, have pivoted in their market and services, and are poised to thrive. According to Mergers & Acquisitions article, there are four traits that agile companies have in common:

1. Open Communication between Employees and Management

Clear and open communication between employees and managers is a critical factor in the success of any business. Everyone is on the same page about the objectives, direction, and expectations. Especially today, were 67% of the US workforce is working from home, communication is key, since it helps create a more productive and satisfying environment, with more engaged and motivated employees.

2. Create a Culture of Accountability

Accountability in the workplace is all about ownership and initiative. When fostering a culture of accountability within a company, employees set their own goals, objectives and strategies, in order to come up with solutions to fix problems. Employees are also responsible for their actions, decisions, behaviors, performance and results. Accountability is also closely linked to stronger work ethic and high employee morale, something that PR firms are looking for in potential acquisitions.

3. Adjust to Changes and Fail Quickly

The ability to accept failure, understand what went wrong, and quickly pivot, is what makes a company successful, especially in today’s uncertain economy. The important thing to learn from the experience and reframe it in a positive light, while moving forward. In a rapidly changing technological environment, amid the unpredictability surrounding our lives today, PE firms are looking for companies that are flexible and capable of adjusting their goals and objectives.

4. Constant Investment in Technology

Investing in technology helps a company and its employees become more efficient. Technology also enhances workplace engagement and increases productivity. At the same time, technological infrastructure gives businesses the ability to work on multiple projects simultaneously and make faster improvements on products and services. As a business grows, priorities change as well. Investing in IT systems and continually looking for technology upgrades within the workplace are vital for remaining successful in a rapidly changing industry and market.

Bottom Line

Agile companies are much more likely to outlast this pandemic and thrive because of innovative ideas, tools, and tactics. PE firms are looking for emerging trends and technologies. Agile companies that prove they are both able and willing to adapt their work style and approach, their goals, strategies and communications to constant changes, will be attractive to outside investors.

Are you an agile company? In addition to the traits just discussed, PE firms also look at the quality of the systems and processes inside your business. To learn how to prevent a buyer from taking advantage of you, please download the Sellers Beware eBook.

Your company is the product. Growth to Exit® is the process. The Buyer is your customer.

^Sources:

^{Agility matters: 4 signs PE firms should examine when considering acquisitions – September 2, 2020}

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