There are a variety of reasons why a company may make an acquisition. If a company is growing quickly, one of the most compelling reasons to make an acquisition is it can accelerate growth. Whether it’s talent or innovations, an acquisition in this type of scenario can shorten the amount of time it takes to hit the next milestone.
Although that scenario makes acquisitions sound very appealing, it’s important to understand that they’re by no means a guarantee of success. In fact, the majority of acquisitions fail. That truth spans from the smallest of businesses to huge corporations. So even though acquisitions offer so much potential, why is it rare for them to be truly successful?
The issue of acquisition failures comes down to a few issues. Those issues include incorrectly identifying targets, taking the wrong approach to financing and not properly integrating an acquisition. Since there are some very real challenges that stand in the way of making an acquisition successful, we want to cover the four most important elements entrepreneurs need to evaluate to get the results they actually desire from an acquisition:
The Right Timing
Many people underestimate just how big of a role timing plays in whether or not a startup is successful. Timing is just as important for acquisitions. A business needs to be at the right stage for an acquisition to work. One of the biggest mistakes a company can make is doing an acquisition because they think it will fix their weaknesses. If a business isn’t currently in a position of stability, they shouldn’t be thinking about an acquisition.
One of the reasons entrepreneurs should always think big is there’s a lot of risk involved in bringing a vision to life. As a result, there needs to be a very big upside. This same principle applies directly to acquisitions. Bringing two businesses together will need to create significantly more value (and definitely not less).
Opportunity to Negotiate
It’s important for an acquisition to be a good deal. That’s why there needs to be room for negotiation. Not only is negotiation important on the financial side of things, but if a company that’s being looked at for an acquisition isn’t willing to do any negotiating, chances are they’re going to drag down the entire acquisition process.
A Clear Way to Integrate
Even if the first three elements are in place, it’s still vital to have a clear way to integrate the acquisition. Without a clear vision for integration, an acquisition is almost guaranteed to fall short of expectations.
While there’s still no way to guarantee that an acquisition will be successful, focusing on these four elements is the best way for an entrepreneur to make an acquisition work as expected.
As the role of procurement continues to increase in scope and importance across organizations, more people are looking at exactly what makes great procurement professionals. While there was a time when procurement was an afterthought for many organizations, its increased role means organizations are looking for talented individuals who can deliver the results needed to thrive. Because countless organizations simply don’t know what they should look for in a procurement professional, we want to provide some clarity by highlighting the five traits that matter most:
Anyone who has come into contact with spend analytics knows they can provide clear information on spending activity. While that can be useful, the reason companies should care about these types of analytics is the information they can offer goes beyond just spending. Specifically, it can help a company increase productivity. It can also boost savings by making it possible to streamline existing purchase-to-pay practices.
How exactly can spend analytics help your business increase savings and streamline its practices? The answer is by identifying some specific areas that can be improved, which are:
Despite more CPOs reporting directly to CFOs, as well as lots of talk about the importance of synergy between procurement and finance, many organizations still keep these functions in very distinct silos. If your organization has more space than you’d like between the two departments, the good news is bringing them together can be a relatively smooth process. A big part of why organizations can find a lot of success by bringing procurement and finance into closer alignment is the two departments already have a lot in common. So with that in mind, here are a handful of steps that can be very useful in encouraging successful collaboration:
Contracts are crucial for enterprises. Without them, there wouldn’t be a way to cement the relationships that enterprises have with their suppliers. Given that suppliers are the source of goods and services that enterprises require to remain functional, it’s easy to understand why contracts are something that need to be taken seriously. Although contracts serve a very important function for enterprises, that doesn’t mean they’re always handled properly.
In recent years, purchasing departments have begun to play a more significant role within many organizations. A big driver of this shift has been the realization by companies of all sizes that purchasing can actually provide a competitive advantage. As a result of this increased significance, it’s important for companies to understand how to properly measure purchasing performance.
Even though it has many common characteristics of a buzzword, the cloud has proven itself to be a lasting shift across the business landscape. As costs continue to come down and options mature in the functionality they provide, businesses continue to shift their operations to cloud platforms.
If your company is exploring different cloud opportunities, we have several important considerations to share with you:
There’s a lot to be said for businesses that are able to maintain agile operations. Even as a business grows, staying agile can provide a significant competitive advantage. One big selling point of the cloud is it supports an agile approach to doing business. Because the cloud makes it possible to keep information shared and updated across an entire organization, it’s possible to avoid the types of communication barriers that can start to slow down a business as it grows in size.
Falling Costs and Increasing Functionality
A big part of why so many businesses choose to move forward with their transition to the cloud is because the numbers make so much sense. As competition continues to increase among cloud vendors, prices continue to be pushed down. The attractive pricing options for cloud technology makes it all that much easier for businesses to transition. What’s really great for businesses that want to use cloud technology is the increasing competition also means vendors are providing as many useful features as possible.
One thing that often gets overlooked in discussions about businesses and the cloud is this transition doesn’t have to be an all or nothing choice. Instead, businesses can take advantage of focused offerings to move the parts of their operations that make sense to the cloud.
Although there are exceptions, this type of targeted transition is generally the best option for the majority of small to medium businesses. The reason this approach works so well is it allows businesses to take advantage of the best cloud technologies that are available without facing any type of large technical hurdles.
A great example of a piece of focused cloud technology that can greatly benefit businesses is purchasing software. Because the purchase order software offered by Bellwether is 100% web-based, it’s easy to access from anywhere. Not only is this software specifically designed to give purchasing managers everything they need to be as efficient as possible, but it makes it possible to customize to specific needs.
From easily automating purchasing processes to enforcing budget thresholds, our cloud software is the top choice of small and mid market purchasing managers. Best of all, the fact that it’s based in the cloud means that it doesn’t require IT support. If you want to see exactly how our cloud solution can help your business save money through increased efficiency, we encourage you to take advantage of our 30 day free trial or let us walk you through a free live demo.
The last thing any purchasing manager wants is for procurement disasters to blow up to the point where it’s costing the company resources and time. Although small errors and miscommunication are part of doing business, you still want to prevent major misfires that have a significant negative impact.
Even though it can be stressful to think about everything that can go wrong with tasks like vendor negotiations, thinking through this process can be a very useful exercise. By taking the time to carefully think through the purchasing process, it becomes possible to identify areas where things can go wrong. Identifying potential pitfalls in advance makes it much easier to figure out the best way to deal with them.
So in the spirt of preventing problems that can lead to major purchasing issues, let’s take a look at four ways you can proactively prevent a very bad situation:
Always Get Everything in Writing
When you’re on the phone with a vendor and you have a dozen other things on your to-do list that need to get done by the end of the day, it’s easy to speed through the conversation and assume that everything is in order. However, unless you have the exact order you discussed in writing, there’s always the possibility of something going wrong. That’s why you can save yourself a lot of headaches by getting details in writing. Even if you’re quite busy at the time, taking this action will save you from complications down the line.
Have a Policy in Place for Disputes
In a perfect world, purchasing managers would be able to go about their job without ever worrying about disputes. But because we’re in the real world, it’s important to understand that disputes may arise. The best way to minimize the negative impact of a dispute is to have a clear policy in place for resolving it. You want to know ahead of time what actions should be taken. This possible complication also shows the importance of keeping detailed records.
Prevent Things from Being Done Twice
In terms of wasting time and resources, duplicated procurement efforts are definitely a problem. One of the best ways to avoid this issue is to centralize all procurement efforts. A proven way to make that happen is by taking advantage of purchasing software. Implementing purchasing software will make it much easier for you to stay on top of purchasing activity and prevent issues like duplication from arising.
Whether it’s done deliberately or accidentally, buying items that aren’t needed may not seem like that big of a deal. However, this is an issue that can snowball and become a very real problem. To prevent that from happening, purchasing managers can enforce budget thresholds via our purchasing software.
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