Tips for Evaluating and Profiting From Acquistions
PE: How long does the entire acquisition process typically take, star t to finish?
Goldstone: We always have an ongoing list of acquisition targets in the pipeline. We have close to 100 that we’re working on constantly, so a lot of the due diligence happens before we even approach a prospect. So it could take a couple of months, [or] it could take a couple of years. Once we’ve made contact, and we think that they’re a viable company to be acquired, then we go into full-bore due diligence where we really try to verify and validate our assumptions of fulfilling that criteria: Does it really fit a strategic imperative and is it a cultural fit as well, in terms of the quality proposition?
... [the acquisition of A&E] was a quick one. It only took a month and a half to two months. They were represented by a broker, and there were a number of companies involved in the mix for a limited auction. So that was a more formal process. Typically, most of our acquisitions in the past five years—and I think we’ve done 15—have not gone to an auction process. They’ve come from our ability to identify, connect and contact prospects, and get them to consider a possible transaction.
PE: AdMedia Partners represented Alexander and Edwards in the deal, but does Hanley Wood seek input or representation from any acquisition firms or specialists on its side?
Goldstone: We always find that it’s better if the prospective seller has M&A consultation and representation that facilitates the whole process. We’ve had a lot of success working with the major M&A firms in the media space. They know us, and they know that when we come to a deal we’re serious about, we can make it happen. And they bring a professional consultation process to the seller that helps facilitate everything. They’re working in the best interests of the seller, but they also help facilitate the process to a better end result.