If done incorrectly, an acquisition can damage not only the financials, but also the culture of a distribution business. Whether you’re buying or selling a company, make sure you have a set of go or no-go criteria, says Jay Greyson of Supply Chain Equity Partners in Go or No Go: The Value of Due Diligence.
Due diligence looks at every facet of a company, including who the customers are and the concentration of customers; vendor relationships and the concentration of vendors (and whether they will allow for M&A); IT systems; and distribution center operations.
Whether you are buying or selling, Greyson says to name two to five things you must have to go through with an acquisition and make sure there is a strong team in place to investigate those criteria.
It’s easy to fall in love with a company as you move through the M&A process, but due diligence is needed. “Don’t be afraid to step away from the table,” Greyson says.