Potential Acquisition Targets – Quality and Customer Service
If you have been following my last few Blog entries, I am continuing the discussion of issues that an acquiring company needs to address to get a better understanding of the potential acquisition target – before a deal is finalized. I pulled much of this content from an article written for The International Reprographic Association (IRgA) newsletter, where I discussed a few of the issues and presented my thoughts:
A key question to ask a potential target is: “Tell me about your level of Quality and Service?” It is critical to have a good understanding of the target company’s expectations, as well as the results they are achieving as relates to quality and service. In most cases the acquiring company views itself as a company that provides high quality printing and excellent customer service. Therefore, it makes sense to acquire a company with a similar reputation that is going to solidify the acquirer’s reputation or improve upon it.
On the other hand, if the target company’s quality and service is lacking, you may think that you can improve the quality and service of the firm you are acquiring. You may consider it much like buying a diamond in the rough, thinking that you might be able to acquire that company for less money than a high-quality house. The catch is the customers of that company are probably paying less than they would if the quality and service were better, and they may not be willing to pay more to cover increased costs.
You need a clear understanding of how the target company is treating its customers. Take the time to inspect the products that are being produced on their equipment. Talk to the customer service representatives and ask them if there is anything the company can do to improve service, in most cases they will be happy to share their thoughts with you.
More questions or issues will be addressed in the upcoming months. If you want to chat, give me a call at 201-523-6326 or Email me at email@example.com.