Putting in place a proven system is key to successful expansion, says Mike Bidwell
In the world of franchising, our mantra is consistent: Follow a proven system for success that can be replicated on a grand scale. So, when the opportunity comes along to grow your business through an acquisition with another entity that already has solid systems in place, why not pursue it?
In my five years as Neighborly’s CEO, we have completed a total of 15 acquisitions: 13 add-on acquisitions and two private equity transactions, trading our own company. Based on experience gained from these acquisitions, the following steps stand out as vital components in the acquisition process.
First, pursue acquisitions with like-minded organizations. By coordinating acquisitions with companies that already serve your current consumer base, or with those that supply the products and services within your current sandbox, the transition will be more seamless.
So, when considering whether or not to pursue an acquisition deal with another company, first ask yourself the following: Do I see our companies working cohesively toward a shared, synergistic goal? If the answer to that question is no, then you should probably reconsider. At the very least, other reasons for doing the deal must be clearly compelling.
Next, prepare to thoroughly consider all phases of the process. Long before the ink dries on the agreement to finalize the deal, a strategy must be in place not only to realize the synergies contemplated during the proposal phase, but also for the acquisition transition and integration, supporting the end-game vision.
In order for all parties to feel confident moving forward, there needs to be a clear game plan in place for how the intended outcomes of the deal can be realistically achieved. Acquisitions will only be effective if preceded by thoughtful strategizing and planning.
Finally, in an acquisition, it is common to get wrapped up in the major deal terms, strategies, and outcomes, as these will be the most obvious results of your deal. But you must remember that these businesses are made up of people, who are largely charged with the execution of these plans.
Businesses do not grow themselves, but rather the people that make up a business are the driving force behind its success. Therefore, details such as the roles played by everyone in a company – ranging from its C-suite executives all the way down to the individual employees that service franchise locations – ought to be considered from day one.
It is nearly impossible to over-communicate with the people in the businesses (both entities), along the way.
While acquisitions offer a promising path to franchise growth, they are complex transactions whose potential impacts are not to be taken lightly. By following these three steps, you can kick the acquisition process off on a positive note.
ABOUT THE AUTHOR
Mike Bidwell is President and CEO of Neighborly. He was a successful and visionary franchisee and served as President of three Neighborly subsidiary franchise companies. In 2000, Neighborly named him Chief Operating Officer (COO) and in 2007, Bidwell was also named President. In January of 2014, he was named President and CEO of Neighborly.
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