We purchase profitable, well-managed companies that are able to continue business as usual and keep their name, culture and management after the acquisition. Over the years, we have developed an acquisition process for analysis, completion and implementation. This process enables a structured acquisition procedure and quality assurance for the acquisitions that are completed.
The process can be divided into the following five steps:
Indutrade strives to, already at an early stage, engage with owners of potential acquisition candidates. Prior to a potential sale, owners are already acquainted with Indutrade and find it natural to involve us in discussions about an acquisition. Indutrade continually engages with companies that are interesting acquisition candidates.
Several parameters are used to evaluate a potential acquisition including market position, customers, competitors, main suppliers, strategic and technical focus, environmental impact, ISO certifications, financial position, historical data and future involvement of key employees. Running the business in a responsible way is critical to creating long-term sustainable growth, development and profitability and is therefore central in the evaluation process. Thorough due diligence minimises the operational and financial risks associated with new acquisitions. The acquisition process is never rushed because allowing time for getting to know each other increases the probability of a successful acquisition. Careful preparation is key to success.
The negotiation stage is primarily about ensuring the following:
- That it will be possible to carry out the acquisition at a price that makes the deal worthwhile.
- That key individuals will stay involved after the acquisition. These are typically joint owners of the company that is being acquired, which is why contingent consideration is often part of the acquisition structure. It means that additional consideration will be paid if the company achieves a certain level of profitability after the acquisition. It thus gives them an incentive to stay with the company, helping it develop and grow.
- It is also important that main suppliers are in favour of the acquisition so that they too remain loyal.
A structured review of the acquired company is done when carrying out an acquisition. The main areas of focus are the acquired company’s:
- Customers and suppliers – will it be possible to expand the scope of clientele and product line?
- Is the organisation being run in a responsible way? Have sustainability aspects been integrated into the business model, business culture, strategies, processes and product offering? Is growth sustainable over the long term?
- Organisation – could it be made more efficient, with more focus on customers and sales?
- Costs, margins and inventory turnover – is it possible to raise profitability and returns? New targets are established that are specific to the company and its conditions.
There is continuous dialogue between Indutrade’s Group management team/business area managers and the acquired company's management team. Ongoing governance is goal oriented with a focus on growth, margins and tied-up assets.