Developing Prospect Criteria

As I’ve stressed  in an earlier post, I recommend including not-for-sale companies in your acquisition search. This will significantly expand your universe of potential acquisition prospects. However, with such a large pool, you must develop criteria through which to filter the prospects in order to narrow your options.

The first step in establishing your criteria for prospects is to review your long-term strategy, taking into consideration each fundamental aspect of your business: marketing, production, distribution, management, sales, accounting, etc. Your acquisition criteria should take each of these core functions into account.

Criteria become an objective touch point for you throughout the entire acquisition process. When you reach an impasse in the decision-making process, you should return to your criteria. There are no ‘‘right’’ or ‘‘wrong’’ criteria. They are simply whatever you value in a market or company to address your one reason for growth.

Taking time to identify and prioritize your criteria is one of the key tasks of your acquisition team, and this must be completed thoroughly early in your growth process.

*This post was adapted from David Braun’s Successful Acquisition, available at