Ideal Acquirer Profile (3 Things You Need to Know About Creating a GREAT IAP) | BOSS Startup Science

With a basic understanding of how and why companies purchase other businesses and what valuation drivers they use, let's build your ideal acquirer profile and acquirer stories. Start by researching historical acquisitions of companies similar to yours. You can use a resource like Crunchbase to identify the following characteristics about previous acquisitions. What industry was the acquirer in? What was the acquirer's annual revenue and cash reserves at the time of the purchase? Did the acquirer make a financial or strategic acquisition? Was their objective to make money or save money? Was there customer alignment between the acquirer and the company they purchased? How did that acquisition compare to the industry average for similar acquisitions? Are there any acquirers that stand out as having made frequent acquisitions of companies similar to yours? This course's toolkit contains an IAP research template to use when compiling your research. Okay, with some baseline research out of the way, let's build your IAP. If you're new to the BOSS process of building profiles like ICP, or have no idea of who your potential acquirer may be, then we suggest you start with a Strengths, Weaknesses, Opportunities, and Threats analysis. You'll do this from the perspective of acquirers that may want to purchase your company. Remember, strengths and weaknesses are internal to your potential acquirer, such as their large capital reserves or aging fleet of vehicles. Opportunities and threats are external to your potential acquirer, like new technologies under development and pending government regulations. Next, using your research, list key demographics and statistics about your ideal acquirer. This may take some more targeted internet research about these acquirers. Look for interviews with company leadership or vision statements about their future path. What was the acquirer's cash balance at the time of acquisition? How many employees do they have? What's their annual revenue? How many customers do they have? Who are their primary competitors? What are their needs? For example, do they need to expand their market share, or do they need to streamline operations to save money? As you did with your ICP, you'll combine your acquirer's SWOT and demographic data into a single concise ideal acquirer profile statement. Here's an example. My ideal acquirer is a North American chemical distribution company with 1,000 to 5,000 employees, an annual revenue of $30 to $100 million, and more than $10 million cash reserves. They seek to expand their line of products and to rapidly grow their market share. At this point, you may have a couple potential acquirers in mind. Using your IAP statement, the companies you have in mind, and the questions you just answered, let's build your Acquirer stories. You'll use your acquirer stories to highlight the value you can deliver to your potential acquirers, and as a concise way to communicate with investors. You use the format: As a type of acquirer, I want to achieve an objective so that I can achieve a desired outcome. Here's an example: As a company looking to diversify my product line. I want to acquire other businesses so I can sell their products to my customers, saving on product development costs and rapidly expanding my sales and market share. You can see how quickly and sharply our acquisition partner comes into focus. With an ideal acquirer profile, several acquirer stories, and research into historical acquisitions of companies similar to yours, list several potential acquirer companies. You'll want to include the company name, number of customers, if you share Share an ideal customer profile with them. If you already have customers, how many of your customers are also their customers, and what percentage of your total customers are their customers, called attachment rate? What average monthly and annual revenue do you generate from each attached customer? Do you have common competitors, and if so, who are they? If this company purchases you, will they use your product to make money off their current customer base, or will they seek to expand into a new market share using your product? Would they acquire your company primarily to make money— increase their top-line revenue— or save money— increase their bottom-line revenue? The more refined, detailed, and researched description of why you're targeting specific acquirers, the more confidence you instill in investors and the more impact your valuation driver KPIs will have. Your detailed IAP statement, acquirer stories, list of potential acquirers, research, and assumptions behind this data will be invaluable as you develop your product, set your go-to-market strategy, form your functional areas, and communicate with investors. You'll build your IAP statement and acquiring stories in this course's toolkit.