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Essential steps when acquiring a new business 3

May 5, 2019 By Peter Kroeger

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 acquisition
preparation – sufficient and well thought-through preparation by the management team making the acquisition
finances – acquirer must be properly prepared financially
negotiating price – never pay too much, plan your negotiation strategy in advance
support – use experienced and practical professional advisors
resources – ensure that you have adequate resources allied to the acquisition process

Acquiring a business is firstly strategic, followed in short order by “people”, after which it is both a financial and a legal matter. Successful acquisitions always have all four of these pillars soundly in place.

What LGBA/HCBA Acquisition Planning advisors can do to assist your business. Real life experience, strategic advice and tactical support.

Assistance with what follows next – a Business Support Programme to help you implement and deliver the plans
Fund raising and acquisitions assistance
Developing the integration plan which is a pre-requisite to making the acquisition a success
And of course we can negotiate on your behalf and project manage the accountants, lawyers, tax experts and due diligence all the way through to completion

Please feel free to get in touch with me at peter.kroeger@lgba.co.uk or on 07904 766230.

Essential steps when acquiring a new business 2

March 31, 2019 By Peter Kroeger

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 you
Do what you do but are not direct competitors because they are in a different geography or a different niche
Have approached you for any reason in the past
You have partnered with

Then use Google searches to find similar companies to expand your search universe of companies that match your criteria:

approach UKTI to set up a project to find companies outside UK
source lists from research organisations (e.g. from Institute of Directors if you are a member)
approach the appropriate Trade Association for a list of members
talk to your personal and advisory networks and ask them to introduce prospective targets
approach advisory companies that specifically act for buyers – such as Langcliffe Merger Connect www.mergerconnect.co.uk or Chelsea Corporate www.chelseacorporate.com and engage them to assist in your search

What LGBA/HCBA Acquisition Planning advisors can do to assist your business. Real life experience, strategic advice and tactical support.

Assistance with what follows next – a Business Support Programme to help you implement and deliver the plans
Assist with developing the profile of the target and of your business
Perform the desk research

More to follow next time. Please feel free to get in touch with me at peter.kroeger@lgbusinessadvisors.co.uk or on 07904 766230 for more information.

See also:
Essential Steps When Acquiring a New Business
Part 1 – What is your strategic reasoning for acquiring a new business?

Essential steps when acquiring a new business 1

March 3, 2019 By Peter Kroeger

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 strategy
opportunistic 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 expansion
customer base
customer spread, i.e. for a manufacturer a number of blue-chip customers, such that there is no undue reliance on a small number of customers
contract durations
repeat business patterns
skill-sets
technology
intellectual property rights
depth and quality of management
uniqueness and competitiveness of products and services
scalability of products and/or services
market position and brand
systems and processes, particularly relating to winning new business
distribution
quality of service
the “halo” effect, the extra revenues and profits that can be gained from e.g. cross selling to one another’s customers or improved supply etc
to build the business in advance of selling it.

For each of these, the key question is – “what would it cost and how long would it take to add these (the “extra” criteria that you have that means something to us) to our own business ourselves, organically?” The right Acquirer, for whom the Seller provides the most amount of value, may well be persuaded to share some of the value with the Seller and reflect that in the purchase price.

What LGBA/HCBA Acquisition Planning advisors can do to assist your business. Real life experience, strategic advice and tactical support.

Develop the value enhancing strategy
Action-focused Business Planning
Assistance with what follows next – a Business Support Programme to help you implement and deliver the plans
Fund raising and acquisitions assistance

Next month I’ll share my top tips on searching for a new business to acquire. Please feel free to get in touch with me at peter.kroeger@lgbusinessadvisors.co.uk or on 07904 766230 if you’d like to find out more.

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What LGBA/HCBA Acquisition Planning advisors can do to assist your business. Real life experience, strategic advice and tactical support.