Buying a business is a major decision and significant investment. The ideal acquisition will be in line with your business strategies, and present excellent deal value.
With that in mind, here are some tips to ensure you get maximum value when acquiring.
1. Get clear on your end goal
To make the best acquisition with high value, it is first important to make sure you have solidified the reasons you are buying a business. How will it benefit your overall business strategy? What are the specific gains you aim to achieve, over what period of time? Also get clear on the ideal parameters for the acquisition. These include the obvious variables of budget, industry, location, turnover, and size.
2. Do your research
A deep and broad knowledge of your target industry and mergers and acquisitions (M&A) activity within it, will strengthen your deal making position. It will give you a sharp sense of the competition, as well as trends and influences affecting the industry now and in the future. These are all indispensable for deciding on a target company, and its valuation.
3. Take a blended approach when assessing a company’s value
It is a common mistake of buyers to leave valuing a business to the financial analysts, with a focus on past yields and in isolation of other factors, but this approach can be dangerously limited. Strategists should also have a voice when valuing a potential purchase, and their vision taken into account for what the value of the buy may represent in the future; i.e. it’s potential.
In addition, speaking to a range of people always elicits useful insights, often in areas you might not have considered. If you can, talk to customers and suppliers; they will give you real insight into the business’ relationships and reputation.
4. Master the art of the deal
Deciding on a price is but the first step in the negotiations. The structure of the deal can be configured in any number of ways, which will significantly affect how the transaction is financed. It is especially important to seek professional guidance here to help with deal structuring and if necessary to take protective measures while still negotiating, such as a no-compete clause.
Also, do not unnecessarily weaken your position by being too anxious to close a deal, risking oversight, or alienating the seller by trying to strong-arm them. Focussing on a win-win scenario will contribute to goodwill, and increase the chances of the best outcome for all parties.
Engaging the services of an expert corporate advisor with a proven track record will help you achieve your acquisition goals.
Join us on 27 September 2018 for the Strategically Selling or Acquiring a Business Conference.
This unique event, held in partnership with Avondale, promises fresh insight into selling or acquiring a business. It is aimed at time-strapped SME owners and leaders looking for strategic support, advice and ideas as they prepare for this critical stage of their career.
Key speakers include Kevin Uphill, a leading international authority on M&A and business transformation strategy.
Joining him on stage will be Eric Keane, former owner of IntraLAN Group. An experienced and highly successful entrepreneur, Eric has built and sold on three companies over the past 20 years. He will be sharing his insights into the benefits and the pitfalls of selling a business.
Avondale, the IoD’s preferred partner of business sales, acquisitions and strategic services, provides IoD members with the expert services to ensure you are fully prepared to reap maximum benefit.
020 7129 8297
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