In our most recent blog article, we talked about acquisitions as a route of company growth. Are you considering it? Well, then read on! One of our clients, Julie Murphy of Designer Draperies of Boston, completed the acquisition process last year. Julie was kind enough to share her story with us: “I started out a one-person workroom, working out of my home, hiring part time help as our volume increased. I knew I wanted to grow. So I started looking at real estate,” Julie began.
Acquisitions for Growth
Originally, Julie intended to expand the business to a new location, a larger workroom outside her home. Then came an opportunity she never expected: “I heard about a local custom window treatments shop that was larger than mine, with more employees. When I met with the owner, it opened my mind to what my business could be.” Julie began to think about acquiring the other company, and so began her journey through acquisitions.
Therefore, what began as an inspired idea turned into a yearlong process that Julie now calls “a huge learning experience.” Julie offered her advice to help a small business owner survive–and conquer–the acquisitions process. Wondering how to navigate an acquisition? Curious about Julie’s results? Read on to find out more!
Top 5 things to do when acquiring a company:
- Get a good team in your corner. Now is the time to make sure your financial team is in place, and that they have experience in the field of acquisitions. Your CPA and attorney will be especially important, but Ten Key is also ready to support and advise you. “Stephanie made me look at my business in a whole different way, opening me up to new opportunities,” says Julie. “She was truly a catalyst for the process of growing my business.”
- Do. Your. Homework. As longtime business owner and a member of the Window Covering Association of America, Julie knew her industry well. However, she went beyond her industry knowledge to delve into the company she planned to acquire. She looked at financial reports to view sales, trends, and cash flow for the last 10 years. She also conducted confidential interviews of employees and vendors so she could get a read on the daily workings of the company she was acquiring.
- Look at every document at every juncture of the process. Throughout the acquisitions process, you’ll likely meet with lawyers several times to go over agreements and data. Never assume that the document you’re looking at today is “exactly the same” as the one you agreed to at the last meeting. Don’t assume that someone will let you know if something has changed. Anything can change, and often does, during the acquisitions process. Be aware.
- Be ready for the long haul. The acquisitions process takes time and effort–often more than you’d ever imagined. It can also be a difficult process where you will be forced to stretch your knowledge and capabilities like never before! “The acquisitions process can be tough, because you can’t control all the factors,” Julie told us. “It will be draining on every level–emotional, physical, everything. Just be prepared.”
- Be ready to walk away if necessary. Julie recommends trusting your gut and protecting yourself and your own business during this process. You’ll invest a great deal of time and money into it, but don’t let that hold you to a bad deal. It’s easy to get so excited about an acquisition that you ignore everything else. (Including any misgivings you may have along the way.) Listen to yourself and the advisers you trust. And be ready to walk away if the deal is not right for you and your company.
A Leap of Faith
Acquisitions challenge you with “a huge leap of faith,” as Julie puts it. It’s not always easy. However, a year later, Julie knows it was a great way to grow her business. Her first quarter sales showed 30% growth, and she has expanded her network and her company with additional staff, new vendors, and more new business. Would she do it all over again? For Julie Murphy and Designer Draperies of Boston, the answer is an emphatic YES: “It was worth the risk, and it worked out wonderfully.”