Finding the Right Acquisition How many deals does a buyer look at for every one that it consummates? As depicted in the illustration above, the answer is, more often than not……a lot. A very aggressive company seeking acquisitions and having broad criteria may actually look at hundreds of deals for every one that it closes on. A company with a narrower focus will still have a very high ratio of deals looked at to deals closed. And the person or company that is selling should take this into account when it has scores of "interested" parties seeking to get a detailed look at the business for sale. In the article that follows, we will explore the implications of this from the buyer’s and the seller’s perspectives. Finding the Right Acquisition From the Buyer’s Perspective Expect a Low Batting Average – The chances of making a successful acquisition on any one deal a company is looking at will almost always be very low. In fact, having a good batting average in acquisition is not necessarily a good thing. It may simply mean you are paying too much. Anybody can buy a business if they overpay. Buyers should therefore be prepared for a lot of misses for a variety of reasons. Very often, after a closer look at a business, a potential buyer determines that there is not enough of a fit to pursue the deal and will end up passing on the opportunity. There are also situations where the fit is right but the seller decides to change course and not sell the business. In some cases the seller may not really be serious about a sale or, where a closely-held business is involved, shareholders with divergent interests may not all agree to a divestiture. In other cases, the seller may end up withdrawing from a divestiture because it can’t get the price it wants. And we all have been in numerous situations where there is another buyer willing to pay more for the business. Perseverance – If there is one predominant characteristic of those who successfully make acquisitions (other than by paying too much), it is perseverance. Because so many deals are looked at that are not consummated, there may be a tendency for some to get discouraged. Perseverance in the face of these obstacles is very important. Businesses that are not for sale today may be for sale 3 months from now. The chemical industry is ever-changing and it is not uncommon for a company’s strategy with respect to divestitures to turn on a dime in a very short period. Those who periodically contact potential sellers in a polite and diplomatic manner will eventually succeed. And those who continually get outbid on transactions from time to time must keep at it. Success is just a matter of time. Being in the right place at the right time can certainly be a factor in making a successful acquisition. But those who succeed do so because they work hard at it, persevere and create their own luck. From the Seller’s Perspective From a seller’s perspective, the flip side of the coin is that there may be a lot of potential buyers who appear interested at the outset of the divestiture process who then drop out after a further, closer look at the business. If a seller gets a lot of calls from "interested" parties, a false sense of security may be created. For sellers who are interested in limiting the number of potential buyers that view confidential information on the business, there will be a need to screen buyers to ensure that only those that are serious get the confidential information.