The cost of buying a business in Europe
Making the right choice in buying a business will ultimately affect the total cost. After reading this page you should have a little more insight into the costs of buying a business in Europe as well as the costs of making bad decisions when buying a business. Whatever the reason for the acquisition it is important that the acquisition is executed in the right way. We will not only discuss the costs that require cash payments, but also costs of mistakes (making the wrong choice).
Making The Right Choice In buying a Business in Europe
For the right choice to be made a few questions need to be answered before we can begin. The first things that needs to be established is what industry are you in? or what industry you are wanting to break into? What are your goals, company vision and strategy?
What is it that you want to achieve with the acquisition? Do you want to Achieve Economies of Scale, Create synergies or gain access to new markets (market development)? What size of business are you looking to acquire? think of this in terms of number of employees, number of location or sales.
Once we know the answer to these questions we can move forward to ask ourselves some more.
Now that we have a better idea of what you looking for, we assess which is the best suited location to acquire a business in your industry. We asses labour pools and costs within the considered areas/countries. Costs such as labour, taxes, distribution and many more should be properly researched.
Finding the Targets
If you are unfamiliar with the country’s market then part of making the right decision on a company to target for acquisition is doing a market scan. Its wise to do a detailed study before continuing the M&A process within the country you are considering. This includes the calculation of possible synergies and the financial returns per target business. Knowing and having the market data will assist tremendously in your decision making. Once its safe to move forward.
Through our network and data base we search for companies in your industry within the targeted country. C.R.E.P. has skilled M&A professionals to approach potential businesses while keeping you anonymous. It is important to keep in mind that just because a business isn’t listed for sale doesn’t mean it isn’t.
Your Acquisition Team
In order to make the right choice in buying a business, you will need a good acquisition team to advise you on all aspects of the acquisition. This team will be tailored to your requirements but usually it consists of you, a lawyer, accountant and M&A advisors.
Your team will assist you in many aspects of the decision making. One of those aspects being Due Diligence. This is basicly a close look into the company of interests financials as well as other relevant information needed to make an informed well calculated decision. Some of the basic questions asked when the due diligence process begins are:
- Why is the Company for sale?
- What is the general perception of the industry the business is in?
- What is the general perception of the business its self?
- What is the out look for the company’s future?
Knowing the Company’s reputation and Strength
Knowing the company of interest reputations and strengths are crucial to making the right choice. Your team will do this using various methods some of them being accessing our network and contacting the company’s suppliers for further insight into the company’s reputation and strengths.
Having the company of interest valuated is an important step. You want to be sure to make the right choice by not paying too much for the targeted company. For more about business valuations click here.
The Costs Of buying a Business Additional Considerations
Before starting with an acquisition you should be sure you have considered all the costs. A lot of buyers have a large portion of their focus on the initial sales price of the business as well as the cost for the M&A adviser. While justified, as the buyer wishes to reduce the costs for his/her company they are also the more obvious costs. It must be made clear that having the C.R.E.P. team behind you will reduce the costs you encounter later on in the process such as the cost of Valuations, Legal fees ,due diligence as well as other transaction costs. There are other hidden costs to consider listed below.
- The Costs of research to determine the right decision and strategy
- The Cost involved in tracking the right specialists
- Workflow and travel in the process
- The Costs spent by internal employees and advisors
- Costs of wrong advice or wrong decisions
- Costs due to a bad transaction that needs to be repaired after the acquisition
- Losses due to less than expected income of the acquired company
The Cost of Buying a business with us
There are a variety of options available when working with C.R.E.P. One of the options is team of professionals tailored to suit your requirement. To know the cost of this would require a talk with us about what your requirements are. Then we would be able to give you a custom quote.