Beyond the first contact, presentation meetings give you the opportunity to meet the owner of the target business and, hopefully, prepare a report. The large number of acquisitions that take place each year (more than 30,000 in 2015) suggests that companies of all sizes around the world rely on mergers and acquisitions to grow. An increasingly popular way to achieve success as a small business owner is the “acquisition”, the undertaking, the purchase and management of an existing operation. If you're considering this path, the authors offer practical tips for each stage of the process. An acquisition is a transaction in which a company buys most or all of the shares of another company to gain control of that company.
Acquisitions are common in businesses and can occur with or without the approval of the target company. With approval, there's often a no-buy clause during the process. While most people usually hear about acquisitions of large well-known companies, mergers and acquisitions (M&A) occur more frequently between small and medium-sized companies than between large companies. Research the industry you're interested in, including the best time to buy, and select two or three companies.
Be discreet: The owner may not want the staff to know they're selling, but be thorough and write down key findings. Usually, when you show interest in buying a company for the first time, you'll get a basic overview of the company's performance. Once an offer has been made and accepted, you have a period of time to access the company's books and records. This usually requires a lot of documentation from you as the new owner of the business and from the company itself.
As an accounting firm with experience providing financial advice to businesses, Wilkinsons Accounting Solutions can provide reliable and intuitive advice for your business on how to best structure operations in the most tax-efficient way possible to minimize your liability. Your acquisition strategy is, in essence, the sum of all your business reasons for requesting this acquisition. The letter of intent also usually gives you exclusive rights to purchase the company for a period of time, usually up to 90 days. As soon as the shutdown ends, you'll need to apply for the necessary business licenses to ensure that your business operations have a smooth transition. However, a business transfer agent, business broker, or corporate financier will be most qualified to provide valuation advice.
Like Zillow or Trulia in real estate, in the area of mergers and acquisitions, there are dozens of online databases where business owners and their bankers list companies that are for sale. You should be clear in your own business plan what your company's long-term objectives are, as this will help you choose the right strategy and the right objective for the acquisition. You have a lot of options here, including SBA loans, traditional bank loans, and using a Rollover for Business Startups (ROBS). Once you've decided that you want to go ahead with the acquisition of a company and you think you have a good idea of the company's value, it's time to negotiate the price.
Once you've identified a business that interests you, it's time to find out how much the business is worth. The best way to choose a business for acquisition is to choose the one that complements yours in the most effective way. Doing so that way would mean that you'll only find a limited range of opportunities that might not be the best fit for your long-term business goals. When evaluating the type of company you want to buy, it's essential to identify fundamental characteristics, such as exposure to certain areas of the market, specialized experience, type of business culture, characteristics of key people, and business geography.
