Build an acquisition strategy before you search

An acquisition can accelerate growth, add a new capability or establish a presence in a new market. But searching for businesses before agreeing what the buyer wants to achieve can create distraction. A clear acquisition strategy makes it easier to distinguish a target that advances the business from one that is merely available or appealing on the surface.

The strategy should answer three questions: Why acquire? What kind of business could support that objective? What evidence would make the buyer confident enough to proceed? Answering these questions before outreach creates a common basis for evaluating opportunities.

Define the strategic objective

Begin with the business outcome. An acquirer may want to add a service line, expand geographically, gain a customer base, secure technical capability or build scale. The objective should be specific enough to guide choices. “Grow faster” is not a complete acquisition rationale; it needs to explain where growth will come from and why buying may be preferable to building or partnering.

A strategy also needs a realistic time horizon. Some capabilities can be integrated quickly; others require investment, regulatory approvals or management attention over a longer period. The buyer should consider whether the expected benefits fit its capacity and priorities.

G&G’s buy-side advisory service starts with acquisition objectives and target criteria, then supports target identification, valuation, negotiation and completion.

Translate objectives into target criteria

Target criteria turn the acquisition rationale into a practical screen. They can cover customer types, geography, products, services, revenue model, size, ownership, workforce, regulatory context and other factors relevant to the objective. It is equally useful to define disqualifiers such as unacceptable concentration, geography, customer conflicts or investment requirements.

The criteria should be focused but not so narrow that they exclude businesses capable of achieving the same goal in a different way. Buyers can separate essential requirements from preferences and revisit the list as they learn more about the market.

Sector knowledge helps make criteria more useful. G&G’s industry pages describe the different factors that can matter to a buyer across sectors. In technology and IT services, for example, recurring revenue, contracted backlog and technical talent may inform target evaluation.

Decide how you will measure value

A buyer should consider what value the target could create for its own strategy, while keeping a clear view of the standalone business. Potential synergies—such as cross-selling, cost savings or expanded capability—need assumptions about timing, investment and execution. If they are not measurable or assigned to an owner, they may remain aspirations rather than a credible investment case.

The buyer should also set an initial view of valuation parameters and the returns it needs. These are not fixed answers; they are guardrails that help the team understand how new information changes the case. Separate the value of the business as it operates today from the additional value the buyer believes it can create.

Prepare the organisation to act

An acquisition can place significant demands on leaders who are already running a business. Identify who can assess targets, make decisions, secure funding, lead diligence and manage integration planning. Agree which steps require board or investment approval and how much time the team can commit.

Confidentiality also needs attention. Acquisition discussions may involve sensitive information about the buyer and the target. Set clear expectations for who is involved and how information will be handled.

Keep reviewing the thesis

A good strategy can evolve as the buyer learns, but changes should be explicit. If the team alters a criterion or investment assumption, record why. This helps decision-makers understand whether the strategy has improved or whether enthusiasm for a particular target is driving the change.

Set decision rules before a target appears

Agree what evidence is needed to advance, pause or stop discussions. Set clear requirements for the initial review and deeper due diligence, and identify who approves each stage. Strategic fit, return requirements and acceptable risk should remain central to the decision.

These decision rules help prevent enthusiasm for a target from overtaking the investment case. They also give management and advisers a consistent basis for discussing trade-offs.

This article is general commentary for Australian business owners and does not take account of any particular business, its circumstances or its objectives. Any figures, ranges and examples are illustrative only and are not a valuation, an appraisal or advice on your business. Advice on a specific business is given only through a confidential engagement with G&G Advisory Partners.