An Interview with William Knoke, founder of Harvard Capital Group.

Alternatives to M&A

Acquiring without Cash

Targeting the Right Candidates

After the Acquisition

M&A Client Profiles

How to Get Started

Knoke:  Companies grow in two ways:  internal operations and by acquisition.  When mature resources are needed right away, acquisitions make sense.  The fast “technopace” beyond 2000 will make mergers even more common than today.

Knoke:  The first step is to assess why the added resources are needed.  Is it to broaden the product line to reach a critical mass?  Is it to gain access to new customers?  Is it the brand name we want?  Is it to gain access to strategic technology?  Then we ask, is there a way to do this without an acquisition?  Many companies forget that joint ventures or contractual liaisons are more flexible than acquit ions.  Mergers are ideal when the need is long term, or when operations have to be tightly integrated at many levels.

Knoke:  That may be, but if there is a strategic fit, can you afford not to acquire?  If you don’t have the cash, we might be able to do a private placement or a leveraged buyout.  Sometimes, you can buy a company without cash by using your own stock.  Another possibility is to do a reverse merger, where the other company acquires you.  If there is a strategic logic to putting two companies together, lack of cash should not be a barrier.

Knoke:  Once we know whom we want to acquire, the next step is to decide the scope.  What size company are we looking for?  What geographical aspects?  What company culture do we want?  What financial resources should the target have?    In general, what specific resources – at a very detailed level – are we looking for?

Knoke:  Ironically, the more narrowly we define our objectives, the easier it will be to define whom to approach.  We look at our contacts, and supplement that with several in-house databases.  Using our selection criteria, we whittle the list down to a workable number of candidates.  Then we look at each of these under a microscope before approaching them.

Knoke:  No deal, however introduced or whatever the merits, will receive proper consideration without appropriate collateral documentation.  High-level mergers require appropriate documentation for the various corporate officers, accountants, attorneys, and technical experts to be of the same mind without unnecessary time delays or misunderstandings.

We have been told our “black books” are among the best in the industry.  For M&A work, they are usually modular to allow us to adapt them to the special characteristics of each candidate we approach, and to provide information on an “as need to know” basis, to avoid untimely confidential disclosures.

Knoke:  Because of the sensitive nature of acquisitions, we normally approach the CEO directly and discreetly.  If the deal makes sense, high-level discussions, negotiations, and the final acquisition and merger will follow.

Knoke:  We will work with you through final negotiations.  After the acquisition, there are issues of the merger itself where the two entities are blended together to realize their synergies, without destroying the essence of what made each company great.  As you grow, since we are familiar with your Company, we can help you with a Private Placement of equity, or even your Initial Public Offering (IPO).

Knoke:  We do not accept all companies as clients.  Our ideal M&A Client Profile is defined below: