When evaluating a target company, it is important to keep in mind that every acquisition process is different. Typically, there are three general levels that a searcher will go through before closing a deal in order to offer the firm’s right price:
- Broad Stroke Evaluation - Each level of evaluation has its own importance and challenges. For example, during the "broad stroke" evaluation, it is important to identify any red flags that could indicate that a company is not a good fit.
- Deep Dive Evaluation - The "deep dive" evaluation is where the searcher really gets into the nitty-gritty of the target company. This is where due diligence comes into play, and it is important to carefully examine all aspects of the company in order to make sure that it is a good fit.
- Negotiation Phase - The "negotiation" phase is where the searcher works with the company to get the best deal possible. It is important to remember that the goal is to get the best deal for both parties, and so it is important to be flexible and open to negotiation.
The key to a successful acquisition is to carefully evaluate the target company at each level, keeping in mind the different challenges that come with each stage. By taking the time to do this, you can be sure that you are getting the best deal possible and that the company is a good fit for your needs.