Acquiring a Business

Insights by Peter Watson.

We come across many people intent on acquiring a business, from well-funded trade buyers to individuals.

We thought it might be useful to come up with our own list of “Dos and Don’ts” to be mindful of when looking to acquire:

Dos

• Ensure you have a credible funding story. This might involve bank letters, evidence of personal/company funds or relationships with other sources of funding. The evidence provided needs to be sufficient to convince a sceptical audience!
• Be clear about the reasons for an acquisition before you devote time and resources to it.
• Ensure that you have the bandwidth to handle this. It can be very time consuming – both the acquisition process itself and the subsequent management oversight, integration etc.
• Establish relationships ASAP. Insist on meeting at the earliest opportunity and create rapport.
• Try to put yourself in the shoes of the seller.
• Keep up the momentum. Slow deal often = no deal.
• Have a 100-day plan – agreed before completion. Hit the road running.

Don’ts

• Don’t expect to buy something for nothing. Amazing bargains do sometimes happen, but much more often they don’t!
• Don’t be too critical – you can always find hundreds of reasons not to buy a company, but you need to see opportunities as well as risks.
• Don’t expect the owner manager to stay beyond their handover. Answering to a new boss won’t suit most owner managers – so look to develop talent beneath.
• Don’t assume your way is the best way. Be open to learning and adopting practices from the businesses you buy – it will go a long way to making them feel valued.

Growing a business organically is not an alternative to making acquisitions – for almost all listed companies acquisitions form a part of their strategy. There continues to be a relationship between size and valuation, and so the rationale of roll-ups can be compelling.

If you’d like to discuss acquisition as a part of your own growth strategy, do book a slot in my diary for a 1-to-1 Chat: https://calendly.com/peterwatsonprism/1-to-1-chat

On the other hand, if you are actually thinking about selling your business then take a look at the two webinars we are hosting in October which will help you make your business more attractive to buyers and increase its value: www.prismcorporatebroking.com/our-webinars