Top 10 Tips on How to Approach Acquisitions

August 18, 2023

With a backdrop of rising costs, increasing interest rates and shortages of labour, you may think that now would be the wrong time to consider acquiring a business.  However if done right, acquisitions can transform a business’s potential, unlock new possibilities for the future and strengthen your existing Company’s position.

Are you ready to expand your business? Here’s how you should approach acquisitions:

1. Conduct Market Research

Perform thorough market research to identify potential target businesses that align with your objectives. Look for companies that have products, services, or expertise that complement your existing business and can create synergies

2. Identify and Approach a Business to acquire

First, you need to identify what you’re looking for in a prospective acquisition. Whether you want to expand into a new geographical region or acquire a business that offers a new service, you need to collate a list of businesses to target. Having an advisory team of experts on hand can be a huge benefit, not only to gather lists of businesses to target but also to deal with any issues that may arise.

3. Engage Professional Help

Acquiring a business can be complex, involving legal, financial, and tax considerations. Engage experienced professionals, such as lawyers, accountants, and financial advisors, to help you navigate the process and ensure a smooth transaction.

4. Dig Further Into Targets

When researching potential businesses to acquire, consider their current productivity KPIs across clients and people and staff turnover. Conduct a thorough evaluation of each potential target company. This should include a detailed analysis of their financial statements, customer base, competitive position, intellectual property, management team, and any potential risks. The most important consideration is how the business and the people will mesh with the buyer’s views and culture. Once you’ve found a prospective business, building a rapport with the business and the owners is important. Spending time with them before discussing a potential deal will help you understand how their business works, their communication style, and their objectives. This will help both sides decide if the acquisition will work.

5. Negotiate and Structure the Deal

Once you have completed due diligence and are satisfied with the target company’s viability, negotiate the terms of the acquisition, including the purchase price, payment structure, and any other relevant terms.

6. Secure Financing

If necessary, secure financing for the acquisition. This can involve a combination of internal funds, bank loans, or other external sources of capital.

7. Handle Problems in the New Business

If there are issues identified during the due diligence process, discuss them with the people who are running the business and come up with a solution. It’s not necessarily something that will stop the deal from happening if it’s an isolated piece of the business and not endemic.

8. Plan for Day One After the Sale

An acquisition shouldn’t be made without a plan in place for what you want to achieve upon completion of the deal. There need to be people in the business who buy into the sale and share the long-term vision of the business strategy. A stable management team is key to keeping the existing business going because everything that is done on day one after the sale is about being consistent with the new teams that are coming in, with staff being the top priority.

9. Plan Integration

Develop a comprehensive integration plan to smoothly merge the acquired business with your existing operations. This plan should address areas such as employee integration, technology systems, branding, and customer communications.

10. Post-Acquisition Evaluation

After the acquisition is complete, monitor the integration process closely and evaluate its success against the initial objectives. Make adjustments as needed to ensure a successful outcome.

We’re here to help! If you have any questions in relation to acquisitions or would like to discuss your specific business circumstances and the potential options available to you, please get in touch with a member of our team.

Chris Sellars

Chris leads a team specialising in M&A and financial Due Diligence services.

With a proven track record of successful transactions, Chris brings extensive deal experience and operational knowledge to assist clients in achieving their business objectives.

Matthew Milnes

Matt leads various projects, including company disposals through MBOs, trade sales, and EOT sales. He also oversees daily team operations and supports their learning and development.

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