Business Acquisition
Business acquisition is a great growth prospect, but it can come with a lot of risk. Acquire a new business the right way with the help of our experienced and skilled charted accountants.
Get StartedWhat is a business acquisition?
A business acquisition is essentially one business buying control of another to become the majority shareholder. There are a number of reasons why you might want to acquire a business including but not limited to, gaining scale or critical mass, or acquiring new technologies or abilities to grow your value proposition.
However, making an acquisition inherently carries risk if you don’t have the right strategies and foundations in place from the beginning. It’s important to have a clear understanding of what your business is lacking and whether the investment will give you a suitable level of return.
How can you successfully acquire a business?
To be successful in your business acquisition, aside from using the services of professional accountants like Jan McDermott Chartered Accountants to get relevant advice, structuring your strategy in accordance with the below objectives will benefit you.
- Consider and set out your acquisition criteria
- Take a structured approach to find businesses that meet your criteria and develop a pipeline of potential acquisitions
- Plan your professional strategy to have conversations with possible sellers
- Have a clear view on valuation and check you can offer and justify the price you want to pay
- Make sure you have a well-defined procedure in place from offer to completion where risks are identified and mitigated
- Put together a detailed integration for after acquisition that focuses on protecting value
What are the pitfalls of acquiring a business?
Being unprepared in your strategy could result in you failing to complete a deal or worse paying over the market rate for a less favourable business. Some typical mistakes that people who are new to business acquisition often make include:
- Not defining acquisition criteria that meets the strategic goals of the business in advance.
- Justifying poor opportunities with ‘on the fly’ criteria and an overly bullish approach to business assessments.
- Not assessing the market sufficiently and so not finding the most suitable businesses or finding the wrong businesses for your requirements.
- Unrealistic valuations leading to an inability to secure desired businesses or overpaying for a business.
- Inefficient processes which result in not enough management time.
- Unclear communications with internal and external stakeholders.
- No post-transaction plan to protect the value acquired.
How we can help you
Jan McDermott Chartered Accountants specialise in all areas of accountancy and tax support for businesses including business acquisition advice. Our team of knowledgeable accountants will assist you throughout the process, ensuring you achieve the best outcome. We will use our expertise to assess a target business, negotiate a price, and organise suitable finance accounting systems after the transaction is completed.
Get in touch with our specialists today to guarantee success in your business acquisitions now and in the future.
Frequently Asked Questions
The best way to find a suitable business for acquisition is to select one that complements your business most effectively. A poorly performing business might be good value to you, if you have what it needs to make it successful. A lot of larger companies do this, but before trying this yourself, you need to be fully sure and confident in your sums (we can help with this) and your capabilities.
Below are some of the key reasons why you may want to acquire another business, more than one might apply. Your reasons should be directly in line with your current business goals.
- You think you can improve the performance and profitability of the target business.
- You want to take away excess capacity (competitors) from your industry.
- You can help the target company to break into the market which positions you better.
- You want to acquire new skills or technologies using the new business.
- You see potential to scale a scalable business.
- You want to grab the opportunity of a hidden gem.
It’s important to do your research on a target company before you take your first steps towards acquiring it.
- Look into the finances of the business
- Find out what assets belong to the company
- Check what liabilities it has (this includes things like taxes and salaries not just debts)
- Ask yourself how you would benefit from acquiring that business