Ready to Grow? How Do You Identify the Right Company to Acquire?
Thinking about growing your business through acquisition? Smart thinking — but only if you pick the right target. Let’s walk through how you can zero in on the best company to acquire, so you don’t just buy a business — you buy the right business.
1. Start With the Numbers
Before anything else: ask, “Does this target strengthen my portfolio?” Look at the financials:
Are earnings (EBITDA) solid and sustainable? ● Does the business have a strong balance sheet, manageable debt, and consistent cash flow?
Is there room to scale without massive new investment? If the numbers don’t pass the smell test, then you should move on.
2. Check Operational Fit
Once the financials look good, ask: “Can this business plug into mine without major headaches?”
Do the systems and processes align (or can they be aligned)?
Is the technology compatible? Will you be spending months fixing infrastructure instead of growing?
What about supply chain, vendor relationships, workflows—are they efficient and clean? If you foresee major friction here, expect it to cost you value or time.
3. Don’t Forget the People & Culture
Acquisition isn’t just buying assets. You’re buying a team, habits, and culture.
Will the leadership stay?
Is there a strong middle management layer that can carry things forward?
Do the company’s values, brand, and market approach align with your own?
4. Shortlist Smartly, Then Vet Thoroughly
You’ll want to create a target list, then run each through a disciplined filtering process.
Preliminary due diligence: legal, operational, compliance issues.
Risk assessment: Hidden liabilities, outdated contracts, unforeseen costs.
Prioritization: Rank remaining targets based on strategic fit, integration ease, and expected return.
Acquisition can be a powerful growth lever — but when you skip the steps above, you increase risk. By being intentional about which business you target, checking fit across financial, operational, and cultural dimensions, and going in with your eyes open, you’ll give yourself the best chance to make the acquisition work for the long run.
Masterworks Capital can help you navigate this checklist and make wise decisions.