What Information to Collect on Acquisition Targets

In the early stages of an acquisition strategy, you are not looking for every detail of a company's history. You are looking for the 'deal-breakers' and the 'deal-makers'. If you collect too much information, you get bogged down in detail; if you collect too little, you risk approaching a company that is a poor strategic fit.

Effective information collection is about building a 'Strategic Profile' of the potential target. This profile allows you to compare targets objectively and decide which ones merit a discreet approach. This article provides a checklist of the commercial intelligence you should aim to gather before you start a conversation.

The Pre-Approach Information Checklist

Before you initiate contact with an off-market target, you should aim to have a clear answer to the following questions. Evans provides the research-led intelligence to fill these gaps, using public data and market signals.

1. Ownership & Governance

• Who are the Persons with Significant Control (PSC)?
• What is the age and tenure of the directors?
• Are there multiple shareholders, or is it a single-owner business?
• Are there any family members involved who might influence a sale?

2. Financial Trajectory

• What is the three-year trend for turnover and operating profit (if available)?
• What is the net asset value and cash position?
• Are there significant debts or charges registered against the business?
• How do their margins compare to industry averages?

3. Market & Customer Position

• What are their core products or services?
• Which sectors do they serve?
• Is there evidence of high customer concentration (e.g., one major client)?
• What is their reputation among customers and competitors?

Identifying 'Strategic Signals'

Beyond the basic data, you are looking for signals that indicate the target's current state. These are not proof that they want to sell, but they are commercial indicators that help you time your approach.

• Succession Signals: Directors reaching retirement age without obvious younger family members or successors in the business.
• Stagnation Signals: Flat turnover for several years, lack of new product launches, or an aging digital presence.
• Event-Driven Signals: Recent loss of a key contract, planning application refusals, or industry-wide regulatory changes.
• Growth Signals: Recent recruitment for senior roles, new site openings, or patent filings (these might make the target more expensive but more attractive).

The importance of the 'Commercial Moat'

One of the most valuable pieces of information to collect is what makes the business hard to replicate. This is their 'moat'. Is it a specific patent? A long-term contract with a blue-chip client? A highly specialised workforce? Or perhaps a prime geographic location? Understanding the moat helps you determine the strategic value of the acquisition beyond just its current profit.

Data you should NOT expect to find early

It is important to manage expectations. You will not find detailed payroll data, individual customer names (usually), exact contract terms, or internal management accounts through public research. Attempting to find this information without the owner's consent is unethical and often illegal. This level of detail is reserved for the 'Data Room' stage of a formal transaction, which only happens after a relationship has been established and an NDA signed.

Using a standardised 'Target Scorecard'

To compare targets objectively, we recommend using a scorecard. This prevents emotional bias—like being impressed by a target's prestige when its financials are weak. A scorecard should weight information according to your acquisition thesis.

The role of Evans in research

Evans provides the target intelligence to build these profiles. We are not corporate finance advisors or brokers. We provide the commercial research that allows you to identify potential strategic targets and understand their market position. Our Acquisition Opportunity Engine monitors these targets for you, ensuring your information stays current.

Remember, identifying a company as a target never implies it is currently for sale. Our research is based on legitimate public signals and discreet inquiry. By using the Build My Acquisition Thesis tool, you can ensure you are collecting the information that actually matters for your growth strategy, rather than getting lost in irrelevant data.