Although it may appear counterintuitive when the economy seems totally derailed, the most successful companies use turbulence as a time to acquire undervalued assets.
A McKinsey study (requires registration) of 200 companies released in September of this year found that "The best growth companies take a different approach. They view the downturn as a time to increase their leads and make acquisitions. They pounce on the opportunities it creates with an alacrity that is the stuff of legends: think of GE's speedy dispatch of deal makers to Asia after the financial markets took a downturn in 1998."
Here are some other things to think about:
A company that approaches a downturn with laser focus on what will create value for shareholders in the long-run may see better returns, but will most certainly have that opportunity-hunting personality accrue to its reputation account. Why? Because investors reward confidence and foresight. As the McKinsey authors put it "countercyclical investment can separate the leaders from the also-rans."
Confident companies that target undervalued assets must still plan for post-acquisition integration. It is common knowledge now that most acquisitions and mergers fail to realize the anticipated value because the after-deal integration is so badly managed. In the haste to acquire and demonstrate a willingness to take countercyclical risk, companies must still have a well thought out internal communication plan to ensure the newly acquired operations add value, again for the long run.
Markets (and even analysts) won't intuitively recognize the value of an acquisition, and may even be doubtful because the business crowd is standing still waiting for 'better times'. The case has to be made immediately, publicly and continuously that the risk of acquiring in a downturn is outweighed by the upside of significant future value to shareholders. That means using all the tools in the communications arsenal to position the deal in this way . . . including web, social and mainstream media strategies.