Private company leaders are feeling positive about future prospects. Stronger balance sheets and easier access to financing mean new opportunities for growth. Are you ready?
It’s a question more and more private company leaders are seriously considering. The fact is, after three years of very slow merger and acquisition (M&A) activity among private companies in Canada, business leaders are feeling more positive about future prospects, have solid balance sheets, access to financing and are looking for new opportunities to grow. In fact, the recent PwC Private Company Services webinar, Getting the deal done: Growing through acquisitions, revealed that a strong Canadian dollar and economic stability led to an all-time record number of Canadian companies acquiring US-based businesses in 2011.
Here at home, healthier economic prospects and improving valuations are expected to lead to increasing numbers of family-owned businesses coming to the market.
Almost 60 percent of the webinar’s participants* are contemplating an acquisition in the next 12 to 24 months. The conditions are certainly right for an acquisition but companies should always be strategic about their M&A activity, says Julian Brown, former partner, national leader, corporate finance at PwC.
“M&A is just one tool that you can use to advance your overall corporate strategy. You’re never going to stop business owners and leaders from being opportunistic about acquisitions. Sometimes it works, but if you are buying something that isn’t in line with your overall strategy, it likely won’t help you achieve your long-term goals.”
Key components of an acquisition strategy
There should only be one reason to make an acquisition and that is to advance your overall strategy and goals for the company. That is the starting point for any effective M&A strategy. From there, you can move through the necessary steps to determine whether M&A is the best option, identify potential targets and ultimately integrate an acquisition, says Brown. “Done right, it can help you get to where you want to be much faster than otherwise possible.”
* 59 individuals responded to the polling question
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