Acquiring Knowledge in M&A Deals

How to make “knowledge assets” part of the deal.

Acquiring a business is an exciting decision that comes with a lot to keep in mind, like due diligence on the seller, checking into legal concerns, inspecting business numbers and history, identifying key employees, etc…

Included in that, you need to consider all of the assets the business depends on and have a transition plan in place.

Assets like product inventory, real estate/leases, equipment, and branding each have their own unique challenges, however these types of assets can be relatively easy to track and manage during the transition. Harder to track and manage? The knowledge.

Processes. Procedures. People.


For an operational, profitable business, sometimes the real value is in the processes and procedures that the previous owner and employees have created and cultivated over the years. 


Oftentimes while selling a business, the knowledge that the business depends on can be hard to identify and manage. This is especially true for small and medium-sized businesses that do not appear to have an employee turnover problem for they have had no need for clear documentation of their processes.


Of course, no matter how diligent you are, there will always be knowledge loss during the transition. However implementing strategy for transitioning knowledge during the acquisition can make things a lot easier and set you up for future success. 

Preventing Knowledge Loss While Purchasing a Business

1. Observe the Management/Previous Owner

A commonly used strategy is to set up a transition period that allows you to shadow the previous owner while they operate the business. During this transition period you are learning how the business operates and absorbing as much as you can. Shadowing the previous owner will give you a unique perspective on the business that you will only have once.

2. Identify Key Processes and People

To identify the key processes, start by recalling what made the business attractive to you. Was it the profit margins? The sales volume? The product quality? 

After identifying these components, dive deeper into the processes and people behind them. Are the processes documented? Which employees know the processes? How do new employees learn the processes?

3. Document the Processes

If key processes are currently not documented, start creating documentation or ask for certain documentation to be made. If a possibility, consider using a knowledge management system or standard templates to help document processes in a structured and efficient manner. 

Another method to consider while documenting your business is through a crowdsourcing strategy. This can save you a ton of time. Check out this VLOG if you want to learn more about crowdsourcing as a knowledge management strategy.


Treat Knowledge As A Valuable Asset

If you are buying a business for equipment or real estate, you would conduct a thorough inspection of those assets. Treat knowledge the same way. Audit the business for the knowledge it depends on and make sure the condition of the knowledge is workable and aligns to your goals for the future of the business.

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