When buying a company for growth, look only at the three success factors:
Customer type and share
Market share and size
Do not get distracted by how much you think you can save on the target company’s balance sheet. This may seem counterproductive, but for the first two years after buying a company, there is little you can do to make it more profitable. When you buy for the three success factors, however, you can turn your purchase into an immediate and sustainable profit center.
Each of these factors alone will help your company’s profitability with new channels for marketing and sales, greater market share, and access to more customers who want your products and services. The top line (or total revenues) of the company you buy also can be positively affected when it is introduced into your sales channels. In making top line the driving factor when buying a company, you give yourself time to integrate the new acquisition into your company while increasing both the top and bottom lines of your first company.
Marilyn Holt, CMC