Part 3 - What do you need to watch out for? Back in March I looked at your strategic reasons for buying a business and in April I gave pointers on searching for a new business to acquire. This month, in the final part of our series, I will highlight some key areas that you need to consider before you make your final purchase. Follow these recommendations and you could avoid a variety of unnecessary pitfalls. The main areas to consider are: proper strategic thinking for an acquisition – be clear about your ‘why’, ‘what’, ‘who’, ‘where’ and ‘when’ and the distinctive benefits you hope to establish from an acquisitionpreparation - sufficient and well thought-through preparation by the management team making the acquisitionfinances - acquirer must be properly prepared financiallynegotiating price - never pay too much, plan your negotiation strategy in advancesupport - use experienced and practical professional advisorsresources - ensure that you have … [Read more...]
Essential steps when acquiring a new business 2
Part 2 - Where do you start your search? Last month I started by considering the strategic reasoning you need when buying a new business. This month, we shall consider how to optimise your new business search. Having decided why you want to buy a business, summarise the base criteria: the broad locations where you want the acquired company to be and also whether you would ideally want to move it to your own location.the size of company – revenue, profits, assets etc and what you can afford.produce a profile of the target company as well as a profile of your own company. Then you need to start the research for companies that fit these criteria. Make a list of companies you know that: Directly compete with youDo what you do but are not direct competitors because they are in a different geography or a different nicheHave approached you for any reason in the pastYou have partnered with Then use Google searches to find similar companies to expand your … [Read more...]
Essential steps when acquiring a new business 1
Part 1 - What is your strategic reasoning for acquiring a business? Why you want to buy a business, where to search and what to look out for. To start with, it helps to be clear about why you are buying. Acquirers can have diverse motivations: a carefully thought out strategyopportunistic e.g. see a competitor of a failing business is up for sale a belief that, by acquiring, you will be able to generate a value significantly greater and faster than the alternative of continuing organic growth. Often, the expected benefits will include one or more from: geographic expansioncustomer basecustomer spread, i.e. for a manufacturer a number of blue-chip customers, such that there is no undue reliance on a small number of customerscontract durationsrepeat business patternsskill-setstechnologyintellectual property rightsdepth and quality of managementuniqueness and competitiveness of products and servicesscalability of products and/or servicesmarket position and brandsystems and … [Read more...]
