Are you interested in acquiring a business? If so, you need the advice of experts on how to do it safely and successfully. Yes, an acquisition can grow your company’s bottom line fast, but if not well planned and thought through, it can also cause unwanted disruptions to your core business. You need to be cautious though, because experts caution that acquiring an existing business is rarely straight forward and often filled with risk. Here are steps to make sure you are making the right decision.
Seek out the advice of experts
Acquiring a business is part art and part skill. Experts like Larry Polhill, Café Valley executive who has a proven history in successful acquisitions, have a bounty of great advice for companies looking to make acquisitions. They will often say the following:
Be Clear About What You Want to Purchase and Why
When you’re buying a company, you should be buying it for a very clear reason. This could be to acquire a product, revenue stream, access to a market, or a company’s IP or talent. You should also consider that there will be an indeterminate adjustment period when the business, its people and other assets will be integrated into yours.
Check Out Everything About the company – Twice!
Due diligence is your time to check out everything about the company and you should definitely take full advantage of this process. Start when you think you may be interested in the company. Go through everything available: web pages, job listings, news stories, blog entries, company filings and so forth.
If everything checks out, go ahead and contact management to measure their interest in selling. If they have and interest, plan a meeting to discuss your thoughts with them. Make sure to visit during business hours so you can see how they operate and if the business is busy. Talk with employees and be nosy.
Be Prepared to Negotiate
When you make an offer, you open up the door to negotiations. So keep in mind that your initial offer and the way it is presented will definitely influence how those negotiations will go. Expect to be unhappy with their response and expect that you will get a counter offer, so leave room to negotiate.
Bring in Your Lawyers, But Don’t Lose Control of the Process
Your lawyers need to be aware of the process and where negotiations are at all times, and should be documenting things, and providing key input. At some point they will move toward the center of the deal, and be in a position to steer things toward a close or away from it. Make sure you are abreast of all of the correspondence and meetings happening between your side and theirs so you do not get surprised about any happenings during the process. Also, make sure that the final decisions on key areas of the acquisition are yours because often lawyers can take over and lead their clients toward a result they never wanted.