vistage presentation - acquisition pipeline (final)-1

Growth through Acquisition: Creating Your Acquisition PipelinePeter Lehrman

CEO I Axial

www.axial.net/vistage

September 16, 2016

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Introduction

CEO of Axial Networks, a platform that confidentially connects buyers and sellers of private mid-sized companies.

Over 500 closed transactions in 2015 via Axial; over 50% between $5M and $50M in purchase price.

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Great acquisitions create massive outperformance

400 Acquisitions since 1984; outperformed the S&P by 20x

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Berkshire Hathaway & GEICO

Ebay & Paypal

Google & Applied Semantics

Transformational lesser known acquisitions

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Agenda for the webinar

The 5 Phases of an acquisition-driven growth strategy

What it takes to create a great pipeline

Getting started and next steps

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Economic motives to make acquisitions

Achieve a cost or scale advantage

Grow revenues faster than you otherwise could

Enter a new market faster than you otherwise could

Acquire a set of skills or technologies strategic to your company

Build a bigger moat around your company

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Economic motives to make acquisitions

Achieve a cost or scale advantage

Grow revenues faster than you otherwise could

Enter a new market faster than you otherwise could

Acquire a set of skills or technologies strategic to your company

Build a bigger moat around your company

20th century pipeline creation

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21st century

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The Overall Acquisition Process

Solidify Business Strategy

Produce Acquisition

Profiles

Identify Targets

Validate Acquisition

Profile Accuracy

Determine Team Needed

Assign Accountability and

KPIs for Target Identification &

Outreach

Gather initial information

1st Draft post-integration plan

Connecting with Targets & Target

Sources

Connecting with Targets Directly

Determining fit & timeline

Review & refine post-integration plan

Draft Investment Memorandum

Due Diligence

Commercial Due Diligence

Legal & Accounting Due Diligence

Finalized post-integration plan

Board Approval

Legal Consummation

Post-transaction

Post-mortem done and documented on deal process

Execute integration plan

Post-mortem on integration

DONE!

* Derived from “The Acquirer’s Playbook, Ian D. Smith

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The Pipeline Creation Process

Create / Refine Acquisition

Profiles

Determine Methods /

Channels for Sourcing Targets

Establish Key Success

Factors / KPIs

Resource the effort and establish

accountability

Execute, Measure, Track, Review, Refine

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Creating an acquisition pipeline

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Start with What? Who? How?

• What is the company’s strategy?

• What acquisition focus areas align to the company’s overall strategy?

• Who is responsible and accountable for identifying and assessing acquisition targets?

• How will they find targets? What methods will they use to uncover opportunities?

• How will they measure their work? What KPIs are appropriate for driving results?

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The Pipeline Creation Process

Create / Refine Acquisition Profiles

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Identifying Targets

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The Pipeline Creation Process

Resourcing the Effort

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Resource the effort (org charts)

Business Unit Head

CEO

Corporate Development Professional

Business Unit Head

CEO

Buy-side Banker

Junior Analyst Junior Analyst

CFO CFO

Private Equity Partner?

Variation 1 Variation 2

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The Pipeline Creation Process

Develop Methods / Channels for

Sourcing Targets

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Good data + constant connections = great pipeline

Axial.net

Axial.netLinkedIn

People databases

Data Connections & Relationships

Hoover’s

Data.com

NetProspex

Hoover’s

Publishing Your Expertise

Niche Industry Conferences

Bankers & Brokers Sales force feedback

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Tier your use of time based on likelihood of relevance

Generalist Bankers

Named TargetsSpecialist Bankers In Your Industry

Trade Associations Business Brokers

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Sales force feedback

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Specialist PE – up-market or down-market

Large Corporations /

Market Leaders

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The Pipeline Creation Process

Metrics & KPIs

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Metrics & KPIs

• Phone calls• Connections made (meetings, completed calls)• NDAs signed• # of deals brought to review• # of deals granted budget for diligence• # offers submitted / # of offers signed• # of transactions closed• Conversion ratios on the above• Deal-flow by source (direct outreach, sell-side broker, conference, platform,

buy-side broker) • Deal-flow by source cross-checked against stage

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Metrics & KPIs (cont’d)

Metrics & KPIs (cont’d)

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Remember

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Next steps if you’re ready to dive deeper

• Who will own it? How will you measure it?

• Axial Acquisition Pipeline Workshop: October 20th, NYC

– Qualified discount code: VISTAGECEO

• Axial Solutions for Corporate M&A

Happy hunting!

Any private questions? peter@axial.net