If you're in the planning stages to acquire a new business for the first time, it's important to understand as much as you can about the company's current market and viability. To get a clear picture of those things, you need a complete competitive analysis. These reports give you a comprehensive look not only at the company's consumer market, but also the competition and growth potential. Most software made for merger and acquisition management includes support for building an analysis like this, but here is an overview of the basic components to help you understand its structure.
The first section of the competitive analysis should detail the company's competitors. The list should be in descending order, starting with those that are the strongest competition. Once you've identified those competitors, evaluate the current marketplace for any new or up-and-coming businesses that may not be completely off the ground yet. The more you know about what the next year or two could bring for the consumer market, the easier it will be to prepare for any challenges you might face with this acquisition.
Competitor Product Summary
The second section should be a summary of the products offered by the competitors you identified in the first section. Evaluate each product on a set of core metrics – value, features, and target market. From there, consider how each competitor markets the product. This may give you some helpful insight into other ways to reach the target market for this new business.
Strength and Weakness Assessment
Take a close look at each competitor, viewing them from the standpoint of one of their consumers. Identify those strengths that are contributing to their success. This may allow you to spot some weaknesses that need bolstering with the company you're acquiring.
At the same time, you'll also want to identify any primary weaknesses of those competitors. Think about where their operation may be the weakest or what you think they may be doing wrong for the consumer experience. Make sure you're offering something better as part of this new acquisition to help position the company for success.
When you view the sales process of these competitors from the point of view of a consumer doing business with them, you'll also be looking at them through the eyes of those who would be your target audience for this new business. Use this experience to better understand your customer and what will help them succeed with your new product.
Market Future Evaluation
The final piece of a complete competitor analysis is an evaluation of the future of the market. Look at what the consumer market currently supports and what the growth trends have been over the last few years. Use that information to project the growth or decline that you can expect from the market in the next couple of years. Remember that if the marketplace isn't growing, you'll need to enter this acquisition with some fresh ideas to help you reach the target market in new ways. For assistance, talk to a merger and acquisition professional like RLS Associates.