Texas convenience giant 7-Eleven recently announced the acquisition of another big player in the convenience-store arena, Speedway. The business, headquartered in Dallas, invested a large sum into the deal. Even though the deal is one that involves billions, $21 billion to be exact, business owners in every bracket can learn valuable lessons from the transaction.
Two specific takeaways include the need to consider diversification in an acquisition deal and the importance of completing due diligence to better ensure financial stability upon completion of the transaction.
Takeaway #1: The importance of diversification
The president and CEO of 7-Eleven states one of the company’s goals with the transaction is to diversify the chain’s presence in the U.S. The move allows 7-Eleven to expand its footprint into locations that they did not have a previous presence, letting the business extend its reach throughout the country.
Expanding a business’s footprint is just one important part of diversification. Another consideration, especially relevant during the current coronavirus pandemic, is an expansion in technology. Acquisitions that bring technological advancement can help solidify an online presence.
Takeaway #2: Financial stability
As part of 7-Eleven’s due diligence, the group analyzed Speedway’s synergy run-rate. This calculation essentially looks at any identifiable revenue enhancements and expenses to get a better idea of the overall impact of the acquisition on 7-Eleven’s portfolio. Ultimately, they expect the transaction to provide a large gain.
This is just one part of a thorough due diligence process that can help to mitigate the risk of surprises after the deal is complete.