This document provides guidance on screening acquisition targets. It recommends casting a wide net to identify potential targets, then applying a crude quantitative screen to generate a long list. A short list should be made by creating profiles for targets that fit the company's strategic rationale and have acceptable valuations and availability. The business development department is responsible for continuously monitoring all targets on the short and watch lists to be prepared for acquisition opportunities.

1. M&A TOOLKIT
Strategic Fit:
Screening Targets
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2. ARE M&A DEALS
PLANNED
or
OPPORTUNISTIC?
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3. Targets should be evaluated for their strategic fit, valuation and
availability
TARGET SCREENING CRITERIA
Cast as wide an initial net as possible
(private; public; divisions within companies)
Crude Quantitative screen “Long List”: Public data only
“Short List”:
Fits Strategic Rationale Create profiles
“Watch List”
Availability/Valuation
Targets to
approach
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4. Targets should be evaluated for their strategic fit, valuation and
availability
Strategic Fit
•How does it advance our strategy?
•How does the target enhance our competitive advantage?
(How will the target benefit from our competitive advantage?)
•Are we buying Resources, Processes, or Values?
Valuation
•What is our “Value Hypothesis”? How can we test it?
•What alternatives to acquisition are there?
•Are we the “Natural Owner”?
Availability
•Is the target available at a value-creating price?
•Why do the owners want to sell?
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5. It is the responsibility of the Business Development Dept to
continuously monitor all potential targets
RESPONSIBILITIES OF THE BUSINESS DEVELOPMENT/M&A DEPT
…..start from the company strategy
…..identify where it might make sense to Buy not Make the strategy
…..evaluate all potential targets against strategic and valuation criteria
…..monitor all short list candidates continuously, whether available or not
…..build relationships with favorite targets early
(commercial relationships years before acquisition is ideal)
If an Investment Bank brings you a deal…….
…….it is already too late
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6. ARE DEALS PLANNED or OPPORTUNISTIC?
“Chance favours the
prepared mind”
Louis Pasteur
Do thorough PLANNING in advance…….
….so you can strike fast when OPPORTUNITIES arise
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