Acquisition is one of many growth strategies a company may adopt, but it can be a risky proposition. Even during a slower economy if a company has the resources available to acquire a weakened competitor, it can emerge in a superior position when the economy strengthens. Tough economic times flush out weak competitors, provide opportunities to buy prime businesses at a lower cost, and force fast growth businesses to become leaner.

BodyBlocks Nutrition Systems, Inc. began looking for companies to acquire to accelerate their growth plans and retained an experienced financial professional to evaluate prospective purchases. Different scenarios were provided to assess how much money would be needed to buy the business and have adequate working capital post acquisition.

Steps taken included:

• Developing financial models to understand the potential return on investment and operational characteristics;
• Creating discounted cash flow models to understand the basic financial value of the prospective acquisition;
• Financial due diligence support and analysis.

This study helped BodyBlocks realize this wasn’t the best acquisition or timing
for them. While an acquisition may or may not be completed, the process is a valuable tool to better understand how to compete in a tough market. If and when a deal is completed, then the truly hard work begins with integration of  the acquired company. 
It’s a time to bring together best practices between  the companies to emerge stronger and better equipped for the eventual market upswing.

http://bodyblocks.com