How to Find Acquisition Targets

In the context of mergers and acquisitions (M&A), finding target companies is a critical first step. In this column, we will explore the main methods of identifying target companies and how to utilize them effectively.

1. Industry Analysis and Market Research

Buyers should prioritize analyzing the industry they intend to enter.

By understanding the competitive structure within the industry, potential market growth, and trends among key companies, buyers can evaluate which companies are suitable for acquisition.

When exploring prospective companies, it is crucial to assess factors like revenue growth rate, market share, and technological capability to select companies with high competitiveness.

Additionally, analyzing competitors to understand movements of key players in the industry can be an effective strategy to list companies with potential for acquisition.

It is particularly important to identify competitors' structural weaknesses and companies with sales intentions in advance.

Conducting a PEST analysis, which considers political, economic, social, and technological factors, is beneficial for analyzing long-term growth and risks of the industry.

2. Utilizing Expert Networks

Leveraging expert networks including investment banks, M&A advisory firms, and accounting firms is an effective way to find target companies.

Investment banks and M&A advisors mediate various sale transactions and possess strong networks for identifying companies with sales intentions or acquisition opportunities.

Moreover, accounting and law firms not only conduct financial and legal due diligence on target companies but can also assist in connecting with companies intending to sell.

Companies looking for acquisitions can also participate in related conferences or industry forums to explore target companies and discover M&A opportunities through networking.

3. Searching for Publicly Available Deals

There is also the method of targeting publicly available deals where sale intentions have been officially disclosed. The process involves bidding as one of several buyers.

What are known as M&A marketplaces:

Companies that have been publicly listed for sale typically find buyers through M&A marketplaces.

These marketplaces have platforms for intermediating company sales, allowing buyers to search sales lists and find suitable companies.

Public Bidding:

Companies that have released sale or bid announcements choose buyers through competitive bidding.

Participating in such public bidding is one approach to finding acquisition targets.

4. Direct Search Method

There is also the approach of directly contacting companies without clear sales intentions to explore acquisition opportunities.

When a company interested in acquisition shows interest in a particular unlisted company, they can directly approach the management to express acquisition intentions. This can be an opportunity to acquire high-quality companies that are not up for sale.

It is also necessary to have a strategy for identifying potential sellers in advance.

This involves contacting companies with potential for sale even if they have not officially expressed intentions to sell. This underscores the need to analyze industry trends and the performance of competitors.

5. Utilizing Partnerships and Collaborative Relationships

Utilizing existing partnerships or collaborative relationships is another method.

This involves exploring acquisition targets based on existing business or collaborative relationships between companies.

For example, supply chain partners, companies involved in joint projects, and technology collaboration firms can be promising acquisition candidates.

Particularly, strategies for acquiring existing suppliers or distributors are frequently employed to secure stable supply chains or enhance cost efficiency.

Additionally, acquiring companies with technological collaboration can help internalize technology and bolster competitiveness, proving to be an effective approach.

6. Conclusion

Identifying target companies involves a variety of methods and procedures, including industry analysis, company exploration, and network utilization.

WMD is supported by M&A experts capable of conducting these processes comprehensively.

Additionally, through ATLAS, our proprietary AI system, we automate enterprise value assessments and quickly analyze the expected sale price of target companies.

Based on this, WMD not only searches for disclosed deals but also actively discovers potential sellers utilizing extensive corporate data and networks to offer tailored acquisition opportunities.

Combining ATLAS’s precise analysis with WMD’s proactive deal sourcing enhances our capability to capture optimal M&A opportunities.

Thank you.