Acquisition Target Evaluation Matrix

TARGET EVALUATION PHILOSOPHY

Evaluating Acquisition Candidates

TARGET EVALUATION FUNDAMENTALS

WHY RIGOROUS EVALUATION MATTERS:
☐ Early enthusiasm often fades in diligence
☐ First impressions miss critical issues
☐ Sellers tell the best story
☐ Numbers require verification
☐ Cultural fit determines integration success

EVALUATION PRINCIPLES:
☐ Trust but verify everything
☐ Understand the "why" behind numbers
☐ Talk to customers and employees
☐ Assess integration complexity honestly
☐ Model downside scenarios
☐ Walk away if it doesn't work

COMMON EVALUATION MISTAKES:
☐ Falling in love with the deal
☐ Confirmation bias
☐ Rushed timeline
☐ Ignoring red flags
☐ Underestimating integration
☐ Overpaying for "strategic value"

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TARGET ASSESSMENT

Comprehensive Target Evaluation Matrix

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ACQUISITION TARGET EVALUATION
═══════════════════════════════════════

TARGET: _______________
Evaluator: _______________
Date: _______________
Version: ___

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DIMENSION 1: STRATEGIC FIT (Weight: 25%)
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PRODUCT/MARKET FIT:
Product alignment with our portfolio: ___/10
Notes: _________________________________

Market expansion opportunity: ___/10
Notes: _________________________________

Customer overlap/complement: ___/10
Notes: _________________________________

TECHNOLOGY VALUE:
Technology differentiation: ___/10
Notes: _________________________________

Build vs. buy analysis: ___/10
Notes: _________________________________

IP/proprietary value: ___/10
Notes: _________________________________

DIMENSION 1 AVERAGE: ___/10

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DIMENSION 2: FINANCIAL QUALITY (Weight: 25%)
═══════════════════════════════════════

REVENUE METRICS:
Revenue: $_____ | Growth: ___% | Quality: ___/10
Notes: _________________________________

Recurring revenue %: ___% | Score: ___/10
Notes: _________________________________

Gross margin: ___% | Score: ___/10
Notes: _________________________________

BUSINESS HEALTH:
Customer concentration (top 10): ___% | Score: ___/10
Notes: _________________________________

Churn/retention: ___% | Score: ___/10
Notes: _________________________________

Unit economics (LTV:CAC): ___ | Score: ___/10
Notes: _________________________________

VALUATION:
Asking price: $_____ | Multiple: ___x revenue
Valuation reasonableness: ___/10
Notes: _________________________________

DIMENSION 2 AVERAGE: ___/10

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DIMENSION 3: TALENT/TEAM (Weight: 20%)
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TEAM ASSESSMENT:
Leadership quality: ___/10
Notes: _________________________________

Key talent retention confidence: ___/10
Notes: _________________________________

Engineering/technical depth: ___/10
Notes: _________________________________

Cultural compatibility: ___/10
Notes: _________________________________

DIMENSION 3 AVERAGE: ___/10

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DIMENSION 4: INTEGRATION COMPLEXITY (Weight: 20%)
═══════════════════════════════════════

OPERATIONAL COMPLEXITY:
Technical integration difficulty: ___/10
Notes: _________________________________

Process harmonization effort: ___/10
Notes: _________________________________

Customer transition risk: ___/10
Notes: _________________________________

ORGANIZATIONAL COMPLEXITY:
Cultural integration challenge: ___/10
Notes: _________________________________

Geographic/time zone complexity: ___/10
Notes: _________________________________

DIMENSION 4 AVERAGE: ___/10

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DIMENSION 5: RISK ASSESSMENT (Weight: 10%)
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KEY RISKS:
Customer concentration risk: ___/10
Key person dependency risk: ___/10
Technology/IP risk: ___/10
Regulatory/legal risk: ___/10
Competitive response risk: ___/10

DIMENSION 5 AVERAGE: ___/10

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OVERALL EVALUATION
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| Dimension | Weight | Score | Weighted |
|-----------|--------|-------|----------|
| Strategic fit | 25% | /10 | |
| Financial quality | 25% | /10 | |
| Talent/Team | 20% | /10 | |
| Integration | 20% | /10 | |
| Risk | 10% | /10 | |
| **TOTAL** | **100%** | | **/10** |

RECOMMENDATION:
☐ Strong proceed (8+)
☐ Proceed with caution (6-8)
☐ Significant concerns (4-6)
☐ Pass (<4)

KEY CONCERNS:
1. _________________________________
2. _________________________________
3. _________________________________

DUE DILIGENCE FOCUS AREAS:
1. _________________________________
2. _________________________________
3. _________________________________

Target Comparison Table

Criteria	Target A	Target B	Target C
Revenue	$__M	$__M	$__M
Growth rate	__%	__%	__%
Gross margin	__%	__%	__%
ARR/Recurring	__%	__%	__%
Asking price	$__M	$__M	$__M
Revenue multiple	__x	__x	__x
Strategic fit	/10	/10	/10
Financial quality	/10	/10	/10
Team quality	/10	/10	/10
Integration risk	/10	/10	/10
OVERALL	/10	/10	/10

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