Some of the various benefits of purchasing another company include a chance to grow, expand, access new markets, and eliminate competition

BUYING A BUSINESS

For existing business owners, purchasing other businesses may prove to be very beneficial as it may provide them with a chance to grow, expand, access new markets and eliminate competition. Nonetheless, if this decision is not made at the right time, there can be some
harsh consequences and challenges that await. Therefore, with the help of S&A Partners, you will be guided through every stage of the process where we will be available to help you explore your options, maximize your return, and minimize any risks.

Preparation for an acquisition

Success and preparation are highly correlated. In order to prepare your business for the transition, chiefly look into the following aspects:

  • Financial capacity :  Do you have enough financial resources to make the transaction possible? If not, it is important for you to examine your options with the bank, credit unions, or other lenders. You must decide on how to attain financing for the transition to take place. You must decide how much you are willing to spend and know your limitations before you begin the process.
  • Internal capacity :  Do you have a team with the required skill set to move forward? You must make the decision on who will oversee the transition and ensure you have enough advisors to help. Create an action plan for how the daily operations of your existing will run while company leaders are busy supervising the acquisition.
  • Cultural impact :  Does the culture at your business adapt to change or will the team members be resistant of the transition?  It is crucial for you to understand your existing culture and the equivalent culture you are seeking in the acquisition.

Locating A Target

Once you are prepared to move forward, the next step includes searching for a target that coincides with your goals. In order to do so, reach out to your network and see if anyone responds. You may also keep in mind those seeking to retire. You may also use a business broker for your convenience.

Once you’ve identified a prospective company, you might want to consider between approaching directly or anonymously through a broker. To maintain confidentiality, the prospective company most likely will ask you to sign a Non-Disclosure Agreement prior to sharing information with you.

Valuation

Purchasing another company is a strategic decision that requires current, accurate and representative data. S&A Partners can help provide an assessment of the prospective company’s value based on considering various complex factors such that we can further
strategize on the negotiation process and terms of the acquisition. Once you have ensured that the compensation is a fair price and it is worthy of investing, we move forward to the Letter of Intent.

Writing the Letter of Intent

If you are satisfied with the value proposition, we will need to issue a Letter of Intent. This document contains the purchase price, payment terms, conditions of the transaction, and
the manner in which the transition phase will be handled. This documentation proves as the general and non-binding framework for the proposed agreement.

Conducting Due Diligence

At this stage in the process, you’ll need to implement legal, financial, and operational due diligence. S&A Partners can help verify that the information and assumptions employed in
pricing the prospective business are accurate. We can also assist in ensuring that the financial assets of the acquisition have been appropriately documented, in terms of both, assets and employees. Finally, it is essential to understand and analyze the operational facets of the transaction in order to verify that the two companies can amalgamate successfully. These include health and safety, human resources, production and various such operational aspects.

Preparing for the Final Stages

When buying a business, there are no assurances of that the deal will be successful. The possibility of the deal breaking down lingers at any stage, and sometimes it works in the client’s interest to stop. At S&A, we will ensure that the conditions of the agreement make sense to you. The complex process of acquisition of a business results in plenty of paperwork. You can expect yourself to be reviewing numerous legal documents. 

When the paperwork has been sorted and signed, a public announcement of the acquisition may be made. After which, all assets will be transitioned to your existing company.

Yet beware that a few steps still remain. S&A Partners will help prepare closing financial statements and calculate any necessary adjustments to the purchase price. This will be followed by the transfer of customers and suppliers of the purchased entity to your existing company.

The Bottom Line

Throughout the various procedures of the acquisition process, S&A Partners will help you navigate from the beginning to the end. Contact us today to learn more about how we can help you.

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