Jhon Harry's Blog

How do you know what big companies are looking for in a purchase?

According to Thomson Reuters, last year, more than 50,000 M & A transactions were completed worldwide. There have been more than 500,000 merger and acquisition transactions over the last 11 years without interruption. A record $ 3.2 trillion in transactions is expected in 2018, exceeding $ 2.6 trillion in 2017.
Competitive conditions, technological advances and globalization have all contributed to the growth of entrepreneurship, whether it be long-term growth or buying to growth. It's not just big tech companies that have developed an acquisition mentality and a keen sense of identifying startups to buy. Even non-technology industries are starting to understand the foresight needed to acquire smaller businesses in order to remain competitive and scale.
For example, just three years after its acquisition by Gores Group in 2013, Hostess Brands has finalized the acquisition of Superior Cake Products. The goal was to quickly enter the growing category of in-store bakeries. The Massachusetts In-Store Bakery Company produces a range of sweet products, including Madeleines, Brownie Bites, Black and White Biscuits and other products manufactured under the Superior on Main brand.
[b]How do you know what big companies are looking for in a purchase? First, we must understand why they would like to buy you. [/b]
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[b]Your talent[/b]
This move has been a success, and Walmart continues to buy talent. "Retailers ShoeBuy and Moosejaw - we bought these companies to really help us speed up in the long tail," said Lore, now head of Wal-Mart's US e-commerce, in an interview with Wall Street Journal. "We also gave managers of these companies the means to manage the category across the entity, and they were not bought by saying," keep doing what you do. "Instead, they were told said we wanted you to manage this category. "
[b]Your platform[/b]
Microsoft bought LinkedIn for $ 26 billion, and here's why. LinkedIn has moved from a strictly professional social network to an advanced and open content platform when you purchase Pulse. Back then, said Deep Nishar, LinkedIn's vice president of product and user experience, "they were hoping that LinkedIn would be the definitive business publishing platform."
In his letter to employees, LinkedIn's CEO cited the acquisition. by YouTube as a model for the operation, which has plunged YouTube into Google, but allowed the video company to exist relatively independently of other Google companies, with some data sharing, connections and more features.
[b]Your technology[/b]
Even more important than the acquisition of Jet.com, PetSmart has acquired Chewy. com for $ 3.35 billion in 2017. The large pet retailer has made the strategic purchase for Chewy's extensive eCommerce network. Adapting to changing buying behavior, Chewy has provided PetSmart with one of the most dynamic e-commerce sites on the planet.
Similarly, as part of an initiative to offer new technology products and services and to compete with cloud providers such as Amazon. com Inc. and Microsoft Corp, Dell Computers purchased EMC in 2016. The agreement created Dell EMC and merged the leading provider of computer storage products with the namesake company built on servers and personal computers. The demand for servers, networking equipment and computers has risen sharply. One year after the buyout, in 2017, 10 000 new business customers had been recruited.
[b]Your mark[/b]
Hostess Brands, with its origins as a product developed in a Kansas City church basement in 1905, has a strong brand name dating back to the era before the Second World War. Its buyer, Metropoulos / Apollo (at the time, the Gores Group), was motivated by the project to invest in the research and development of healthier seasonal variants of Hostess snacks. With its recognizable brand and its existing distribution channels, Hostess has been able to present these new products to a loyal and curious clientele.
Alec Gores, President and CEO of the Gores Group, said in a statement at the time: "Hostess presents a unique opportunity to invest in an iconic brand with solid fundamentals and good growth." The acquisition was successful in its early stages as Hostess Brands managed to grow its sales at a compound annual growth rate (CAGR) of 15% throughout 2015 and 2016. Although it did not improve more than 2% in the second quarter of 2017, some analysts are confident that Hostess will be able to increase its market share from 18% to 23%.
[b]Your access to a new demography.[/b]
Clorox purchased environmentally friendly Burt's Bees for $ 913 million in 2007 to better target millennials for healthier, safer, more natural and sustainable products. In 2016, the company launched Burt's Bees (R); Natural Launchpad, a grant program for small businesses in the health and wellness field to attract and engage millennials socially responsible. The program offers a contest for natural resource entrepreneurs with a $ 10,000 cash grant, a day of coaching at Burt's Bees Headquarters in Durham, North Carolina, access to a community of peers, and the award for excellence in human resources management.
[b]Your distribution model.[/b]
In an attempt to compete with Gillette, Unilever paid $ 1 billion for the Dollar Shave Club and its direct-to-consumer channel and loyal customers. At just four years old, and launched with a beloved YouTube video that garnered over 25 million views, Dollar Shave Club was the disruptive market Unilever was looking for.
The Dollar Shave Club recently led the company's sales to Unilever with a 47% jump in direct sales to consumers between 2015 and 2016. Unilever has also been loyal to this move. More than 50% of subscribers who purchased DSC razors in the first three months of 2015 remained customers in April 2016, according to Slice Intelligence.
[b]Driving forces[/b]
Due to low inflation, the context of low interest rates in which we operate has allowed companies to borrow money for acquisitions at very low rates, and many expect this to happen. that this trend is maintained. At the same time, investments should be more scarce and more selective. Now, more than ever, it's important to align your business with a strategy that will make you a brilliant silver dollar in a sand bed.
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