11 Jul Five Steps Every IT Services Business Should Take To Successfully Prepare For a Merger and Acquisition
Want to best prepare for a successful merger and acquisition (M&A) initiative, rather than completely flounder?
We thought so.
M&A is more about looking good to prospective buyers and/or sellers. There’s a lot to it.
To prepare for a successful M&A process, there’s a few things you need to know.
Do this for a successful merger and acquisition result
To best be prepared for a successful merger or acquisition, there are a few key principles you need to know and be prepared for.
Here are five we feel are the most relevant to getting what you want.
- Double-digit annual growth. Your IT Services business needs to set goals to achieve double-digit annual growth. You’ll want the revenue growth to impact both gross revenue and profit.
- A healthy balance sheet. A healthy balance sheet with strong retained earnings and minimal debt will make your firm more desirable to potential buyers.
- Clearly differentiated service. You ideally want to have a service that’s offered to a specific audience, with a clear value statement, and positioned as number one or number two, in your industry or market. To craft this, we’d suggest going through a specialization and productization process, much like we offer.
- Recurring revenue equaling 30% of total annual revenue. In order to make a potential buyer salivate with interest, you’ll need to show that your annual recurring revenue makes up at least thirty percent of total revenue.
- New revenue stream. One of the things that will undoubtedly help you create a conversation of interest, is by developing a new stream of revenue. That might look like a new line of service you offer your clients, a breakthrough software expansion, or a new location that services a geographic location. Whatever it is, we’d suggest developing a strategic plan to build this, on an annual basis.
The devil’s in the details
There are tons of little details that go into planning an M&A initiative.
It’s not as simple as your broker may convince you it is.
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