You need to specify target industries and criteria for evaluating candidates for acquisition within these industries.
- the companies’ desired size and location
- how they are to be found (internal search, intermediaries, unsolicited offers)
- range and rates of a target company’s revenues, growth, earnings and net worth
- the desired demographics and buying habits of the seller’s customers
- the source of acquisition financing (including logistics for obtaining capital, and the targeted amount and method of payment)
- your tax and financial preference for asset vs. stock transactions
- financial returns desired and operating synergies to be achieved
- impact of the acquisition on existing shareholders
- possible competing bidders for qualified candidates
- members of the acquisition team and each of their roles
- nature and types of risks you are willing to assume, including your willingness to consider turnaround or troubled companies
- desired geographic location of the target companies
- your company’s intentions regarding retention or replacement of the target company’s management team (even if this plan would change when a different company is acquired)
- your openness to partial ownership of the seller’s entity or willingness to consider a spin-off sale, such as the purchase of an operating division’s assets or a subsidiary’s stock
- your interest in launching an unfriendly takeover of a publicly-held company or buying debt from the largest creditor of a privately-held company.