BeautyLink - Volume 6, Issue 3 - (Page 31)

Navigating the Acquisition Path THERE IS NO COOKIE-CUTTER APPROACH BY BEAUTYLINK STAFF B usinesses typically grow through one of two approaches. They grow organically by building a new location "from the ground up," or they acquire another institution. An article in the May 5 Wall Street Journal reported that merger and acquisition activity in the U.S. set a record pace in the first four months of 2014. While growth is good, it often comes with growing pains. BeautyLink spoke with a few AACS member schools about navigating operational and cultural challenges during the acquisition process. Tricoci University of Beauty Culture has recently been adding locations to complement and build upon its Chicago-area schools. Since 2011, the school has added one location per year and the school plans to add two to five campuses annually, primarily through acquisition. Regardless of the size of an acquisition, Tricoci CEO Brian Weed says that it is important to have the right expertise involved. The specialized knowledge may come in the form of a consultant, but schools can often begin with their attorney and auditor, particularly if the auditor is experienced in the education arena. Weed noted four categories that demand scrutiny before a deal proceeds. 1] Financial Data. School owners must "The dynamics of each transaction are going to be unique. Acquiring a struggling independent school will require a different approach than purchasing a multi-location school with solid performance metrics." - B&H Education CEO Mike Flecker procedures are far more cash-based. Acquiring institutions also need to carefully examine student accounts in order to determine if a good fit exists. 2] the purchase of IT systems required to harmonize the two institutions' data. 3] Regulatory Issues. Uncertainty on the regulatory side may be a prime factor in calling off a potential deal. A clean bill determine if the financials reported by the Operational Diligence. The cost of organization they are acquiring comply with the transaction is not complete if it does of health on the annual audit is a good what the acquiring institution expects upon not account for the operational costs start, but an audit should not serve as the associated with bringing the acquired closure of the deal. A discrepancy does not sole standard for assessing compliance. necessarily mean an erroneous method or organization over to the purchaser's operAcquiring institutions must do a thorough dishonest intentions, but may reflect a difating methods. Operational expenses may review of student files before finalizing ference in the accounting approach used include the cost of new curriculum and the transaction. by each entity. For example, many schools may think Training Learn The course ML121 - Negotiation Skills is available on the AACS Online Visit the they are running on an Center. Members call AACS at 800-831-1086 for your VIP Discount Code. accrual basis, but closer More following URL to learn more about this course: www.aacstraining.org/courses/ML121. scrutiny indicates their B E AUT YL I NK | C E L* E * BR AT E | 2 0 1 4 | 31 http://www.aacstraining.org/courses/ML121

Table of Contents for the Digital Edition of BeautyLink - Volume 6, Issue 3

Message From the Aacs President & CEA Chair
The Workings of Washington
The Art of the Consult
A Student’s Perspective
Celebrating Our Graduates
Access and Affordability
And Then There’s Compliance
Are You Ready to Thrive?
Navigating the Acquisition Path
Manlink
Creating a Marketing Mixture
Multicultural Corner
Culture Trumps Strategy
Beauty Changes Lives
Engaged Learning
Superstar Graduate
20 Ways to Celebrate You
Battle of the Strands
Students Leaving the Beauty School “Nest''
Why Every Educator Needs to Be at CEA This Year
Step by Step
Voices From the Classroom
People & Places
Create a Recipe for the Future
New Products & Services
Associate Member Profiles: Furniture Manufacturers
New School Members
Upcoming 2014-15 Events
Index to Advertisers
Advertisers.com

BeautyLink - Volume 6, Issue 3

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