
Never grow by acquisition
As the old saying goes "Never grow by acquisition".
Acquisition is a risky strategy, all too often companies end up with a pig in a poke.
Companies think when they are buying customers they are buying profit... they're not.
They think that buying a profitable company it will make them profitable... it won't.
They think the customers will be pleased to switch product line ... they won't be, and they'll blame the supplier.
They is an argument for a "synergy" to integrate with other offerings and getting into the market rapidly.... integration is tough and slow
They think the big company will provide the level of investment necessary to expand - it won't.
EBITDA isn't in the GAAP - for a good reason.
How much is a loss making company worth? Are you blitz scaling? are you? are you really?
"Really its a merger"... Check out the illustration for The Economist article "The Trouble with Mergers"
Asking the seller questions is not "due diligence".
Do a better job than your competitors at a price your customers find sustainable, at a profit and then like Sun Tzu settle down by the river... "If you wait by the river long enough, the bodies of your enemies will float by."