Brett Hickey, Founder & CEO of Star Mountain Capital Speaks With Young Presidents’ Organization (YPO) About Strategic Add-On Acquisitions. YPO is an invitation only, premier global network of over 20,000 chief executives which Brett Hickey has been a member / board member of for over 8 years
5 Tips for Small and Medium-Sized Businesses Making Strategic Add-On Acquisitions:
“When done correctly, acquisitions can be a highlyeffective way to increase enterprise value,” says Founder& CEO of Star MountainCapital, Brett Hickey (YPO New York City). “Making a strategic add-onacquisition can result in greater scale, efficiencies and a diversified customer base resulting in EBITDA multiple expansion.”
1. Long-term Vision: Create a long term business plan by asking two key questions: who are your potential buyers and what will they consider important from a valuation perspective? This will help ensure you optimize your time and capital.
2. Due Diligence Team: Have a detailed due diligence plan and team in place to analyze and execute acquisition opportunities. This is an important process that requires experienced professionals and takes an inordinate amount of time. Allocate team member bandwidth and assign responsibilities after evaluating the opportunity cost of each team member’s time. Effective human resource planning is critical to your success.
3. Post-Acquisition Integration: With your strategic advisor and operating team, create pre-closing, 90 day, 6 month and 12 month integration plans. Deals often consume more time near closing so it is important to plan in advance.
4. Strategic Financial Partners: Ideally, you will want a firm that is specialized and well-versed in acquisitions and operational integration. Consider your financing partner’s time horizons for liquidity, appetite to finance growth, willingness to work through challenges, value-added best practices and relationships.
5. Remember the Facts: As entrepreneurs and business owners, we tend to focus on the value that is “possible to create.” Remember that synergies are often difficult to achieve and must be well-managed. Deal and integration expenses are often more than anticipated in terms of both time and capital. It is key to establish realistic goals and expectations.
Star Mountain Capital Platform Highlights Includes a Four Pronged Approach Focused Exclusively on the Lower Middle-Market:
1. Direct Credit Investments
2. Direct Structured and Control Equity Investments
3. Strategic Fund-of-Funds Investments
4. Secondary Fund Investments Helping Provide Liquidity to Other Limited Partners
Click here to view the article on Star Mountain Capital’s website.