The Hong Kong and London headquartered IBID Group is associated with careful evaluation of investments for not just valuation, but value addition. From profitability to vision compatibility and output from reference customers, all key factors are considered. David Barzilay fast success rules for successful business acquisition can make a sea of change to successful acquisitions by investors.
- David Barzilay Fast Success Rule 1: Value Addition, Going Beyond Mere Valuation
The IBID Group always centers on speed of implementation and competitive advantage of the acquired company. Therefore, the emphasis is on value creation and addition, not merely valuation. People are tied to products, and technology which is disruptive has the capacity to shape future success. Therefore, the emphasis should be on going beyond merely valuing the company and ensuring that it adds something new to the industry, the shareholders and investors and the group in general.
- David Barzilay Fast Success Rule 2: Reference Customers Should Appreciate Products and Services
Reference customers– particularly those concerning early stage product– are always a positive sign the acquisition is a favorable one. Commercializing processes, marketing products and building pipelines successfully can shape the future fortunes of the portfolio company and its investors.
- David Barzilay Fast Success Rule 3: Employee Retention Counts
Any acquisition can only be successful if employee and R&D retention is easy for the portfolio company. Investors are always looking for winning success stories that will reach the finish line when it comes to successful outcomes and profits. Time and effort is invested into integrating the employees of the acquired company and placing them at top leadership posts. Retaining top talent is a critical part of the acquisition strategy.
- David Barzilay Fast Success Rule 4: Acquisition is Not a Risk, But an Opportunity
Startups should be chosen for their stability. While there is no reward without risk, it should be within acceptable limits. Acquisition should represent an opportunity for growth. Acquisition should mean accessing top resources, leading human capital and effective operations.
- David Barzilay Fast Success Rule 5: Revenue Potential Should be Proven
For an acquisition to be successful, there needs to be complete idea of the revenue potential of the potential acquiree and the potential for synergy. The bid price needs to consider the value of the companies that one seeks to acquire. Companies with a potential for growth need to have high valuations in terms of revenue. Investors always seek high growth potential and companies should be worth their time and money. Executing a growth strategy to effectively sell the product signals a business that is thriving.
- David Barzilay Fast Success Rule 6: Avoid Looking for One-Size-Fit-All Approaches
The experience in acquisition has indicated that there is no best practice for integration and no methodology, magic bullet or single solution for successful acquisition. Integration of an acquisition is a situational process. Integrating an acquired company with a mature business model is essential by considering the life cycle stage, teams, products, customers and growth possibilities.
- David Barzilay Fast Success Rule 7: Building the Right Relationship Matters
Integration of an acquisition centers on building the relationship with the portfolio company. The important key to acquisition success is that the target company is integrable. This means integration at not just the technology level, but also the defining feature of the relationship. The correct relationship between counterparts in two companies is essential for a transaction to be positive. Acquisition transactions are carefully based on nurturing a positive mentoring relationship between the acquired and investor company. Trust is an essential part of the integration of the companies as is high level of interaction.
- David Barzilay Fast Success Rule 8: Ensure The Change is Gradual
Leaving things as they are for an acquisition is not the right approach. Rather than status quo, gradual change is the key to a successful acquisition. The winning move is to make the transition to integration following the acquisition smoothly and seamlessly.
- David Barzilay Fast Success Rule 9: Understand the True Value of the Business
It is important to consider the true value of the business before making an acquisition. Consider aspects such as the areas where the potential acquirer is working to fit with the business. Another important point is the kind of customer a potential acquirer targets. The potential portfolio company’s value proposition for customers is also crucial element of the step towards successful business acquisition. Identify the new potential for growth and development of joint value propositions. Developing a joint value proposition that show how to generate revenue synergies from a joint perspective. Underlying pieces of the value proposition need to be understood at length.
- David Barzilay Fast Success Rule 10: The Revenue Potential of the Company Needs to be Cashed in
Having great business potential is only one aspect of the revenue generation. Executing the plan of action is equally important. With a proven track record for excellence, the company which makes for traction is the right choice for an acquisition. Startups that are too oriented towards future projections instead of actual growth are not the right choice. Vanity business plans with no sustainable profits are not what investors are looking for. The focus should be on companies making profit in the now. To ensure growth and stability, there needs to a vision that can be executed in the present. Focusing on all aspects of the portfolio company and assessing project success can prevent the investor from being the only source of support. Apart from the investment company, there should also be industry support for a business. Focusing on only one aspect is a unidimensional view that does not consider the other factors.
In the final assessment, David Barzilay fast success rules are meant to be analyzed and applied with a critical perspective. There is no surefire recipe for acquisition success but these important rules point to the direction which a company should take in order to succeed and benefit the investing company, the shareholders, the industry and the corporate ecosystem.