Criterions for screening new acquisition candidates

Question

What are the criterions for screening new acquisition candidates to keep or strip accessible businesses?

Answer 1

Rather, the organization spends more time and attempt screening new acquisition candidates and deciding whether to keep or strip accessible businesses, using such criterion as:

i. Whether the business can meet commercial targets for the profitability and return on investment.

ii. Whether the business will need considerable infusion of capital to put back out-of-date equipment and plants, fund expansion, and give working capital.

iii. Whether the business is an industry with important growth potential.

iv. Whether the business is large enough to contribute significantly to the parent firm’s base line.

v. Whether there is a potential for combination difficulties or unfavorable government regulations regarding the environment or product safety.

vi. Whether there is industry susceptibility to recession, high interest rates, inflation, or shifts in government rule.