Snaring A Suitor.

• Author: CAREY, DENNIS C.

Want your company to be acquired? Learn to think like a buyer.

Dennis Kozlowski, chairman and CEO of Tyco International, is one of the nation's most experienced executives when it comes to mergers and acquisitions. Over the last few years under his leadership, Tyco has acquired more than 100 companies. By any measure, he's in an elite group of "serial acquirers."

In an interview, he once was asked how he and his key strategists decide which companies to pursue. He revealed that, at any given time, Tyco keeps a fluctuating list of some 30 companies that are possible targets. The implication of Tyco's list is that acquisition is rarely a product of circumstance and fortune. Rather, it's a carefully conceived element of corporate strategy, designed to achieve specific goals the company has in mind.

With the exception of hostile mergers, every acquisition requires a willing seller. Yet remarkably, most sellers don't approach the sale of their business with anywhere near the sense of strategy that buyers do. Smaller companies in particular tend to look at a sale only as an option to unload a family business, take advantage of temporarily high valuations in a given industry - or simply as a way to cash out of an enterprise they no longer have the resources and energy to run themselves. In some cases, a sale is the only option when a company has no succession plan and needs new leadership. Sometimes a sale is an unpredictable but fortuitous event -- a sudden windfall that benefits lucky and unsuspecting owners.

In fact, selling a company is no less a strategic action than purchasing one, regardless of the size of the business or the details of the transaction. The most successful sellers are those who learn to think like buyers: developing a strategy, carefully considering the comparative advantages of possible partners, building a long-term relationship and using the steps leading to a sale to enhance the value of their franchise.

Last year, Kozlowski, Jan Leschly, CEO of SmithKlineBeecham, and I founded the M&A Group (www.themagroup.com), an organization of CEOs who have established themselves as leaders in M&A transactions.

At a recent meeting, I was struck by how often these executives concede that many of their acquisitions lead to surprises and disappointment. According to David Komansky, CEO and chairman of Merrill Lynch, you never know why a company wants to sell itself until you purchase it.

Komansky's words remind us that, at bottom, what every acquirer is looking for in a potential target company is reassurance. Buyers hate surprises, and to the extent a seller can put a buyer's mind at ease up front, the more attractive the...