As I head off to celebrate July 4th with my family and friends, I’m reminded of what we call “brother-in-law” companies. In some ways, the close relationship between family members can resemble the relationship between a buyer and an acquisition prospect.
These “brother-in-law companies” are prospects that a CEO believes are a great deal because he or she has access to a special information source (such as a brother-in law inside the organization.) While being close to your family is a good thing, it does make objective judgment challenging. In the same way, the CEO may have difficulty remaining unbiased when researching “brother-in-law” companies.
Using objective criteria can help. When we research companies like this, we often find them less desirable than our client believes. By applying rigorous and systematic research to the prospect criteria, we may determine that despite the “inside” information, the target companies may not be such a great fit.
*This post was adapted from David Braun’s Successful Acquisitions, available at Amazon.com