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I recently stumbled across an M&A readiness checklist put out by Canada’s export credit agency, Export Development Canada. If you have a client that isn’t an experienced buyer, I think this checklist is a great way to help their board and management assess what they need to do in order to prepare to implement an acquisition strategy. The checklist includes nine specific items, including the formation of an M&A team, the preparation of a corporate strategy that identifies target markets and entry strategies, including M&A, and the need to define the type of acquisition to be pursued and the specific criteria for acquisition targets.  This excerpt addresses this last point:

Specific selection criteria and indicators for assessing potential acquisition targets are clearly defined.

Why it’s important: Specifying what you’re looking for will help you find suitable companies to buy or merge with, based on your industry and needs. Some things to consider include the target company’s:

– Size (number of employees and revenue)
– Location (country and/or region)
– Expertise, skills or operational capacity
– Production capacity (minimum and maximum)
– Markets served (territory covered and distribution channels)
– Type of customers (B2B/B2C and customer profiles)
– Corporate governance (ownership structure, commitments to environmental, social and governance (ESG) standards and diversity and inclusion targets)
– Any additional selection criteria, for example, product or company certifications, complementary research and development, etc.

How to measure success: You have a defined profile of the ideal target company with the criteria you’re looking for. It should be regularly updated based on feedback and changing market conditions.

– John Jenkins