Steps to Acquiring an Existing Business
Often, entrepreneurs choose to acquire a business that is already up and running rather than start up a new company. This provides them with the advantage of obtaining a company that already has a brand name, reputation, clients, and assets. If this seems like the right move for you, here are the steps you need to take to accomplish a business acquisition.
Consider Your Interests and Abilities
Ideally, your business acquisition should be in an industry that aligns with your skills and interests. Already having knowledge and experience in the industry will make it much easier for you to step in and take the company over.
Ultimately, you should already have potential financing sources lined up by the time you are ready to make an offer. For instance, banks, credit unions, and private equity firms.
Look for Potential Candidates
Create a network of contacts that can assist you in locating possible candidates for acquisition. These may include brokers, accountants, attorneys, and other intermediaries that interact with businesses. Research as many possibilities. That way you can compare their advantages and drawbacks, narrow your options, and find the right company to fit your vision.
Make Your Choice
After you have assessed all the possibilities, make your final selection. Have accountant research the company’s financial situation, and hire experts to perform due diligence on the business. Rather than accept the owner’s initial asking price, make your own assessment of the value of the company.
Work with an Attorney
Certainly, find an attorney that is knowledgeable and experienced in business acquisitions. The attorney will be able to assist you in compiling the documentation necessary to complete the transaction.
Prepare a Business Plan
A post-acquisition business plan should not be based solely on the company’s past performance. Preferably on your vision for growing the business and increasing profitability. Create a long-term plan that includes strategies for growth and profit projections. This will help you understand the company’s potential and arrive at your final decision to acquire it.
For more support on the business acquisition process, contact Toluca Lake Capital.