How to prepare for buying a business ?In this page we will describe the some of the main items to prepare when acquiring a new business. We will start with some simple advice and move on through some other preparations that are needed when buying a business. For a more indepth look into the different phases of a business acquisition please read Steps to buying a business.
When you have started early with your preparation in detail for buying a business. The process will go a lot smoother and later will save you time and money. Preparing well not only makes you appear more professional but it makes all the people involved respect your professionalism. Good preparation starts with a good business plan. Your company strategy needs to be clear in order for you and those involved to understand your objectives.
The Minimum Amount of Preparation
The Minimum amount of preparation you should start with is a 1 page document describing the criteria of the company you wish to target. Within this document important items such as the size, location ,activity as well as other important characteristics of the type of company you are interested in should be listed. Once this has been determined a better understanding of what companies we need to target is achieved.
Knowing your Goals When Buying a Business
There are many reasons for acquiring a business. For example,Provide services to your customers in other territories, gain access to new markets, gain access to new products/natural resources or perhaps create New Synergies.
Our advice is to take the necessary time to think and describe what it is you want to achieve with a business acquisition then put it on paper. This will allow you to share your vision with your brokers and management team. This will not only help you get a clearer picture but it will give your team a chance to give their opinions as well as prevent misunderstanding in the future.
Having your business strategically ready is extremely important. Ask yourself, What is it that you want to achieve with a business acquisition? What synergies do you have planned? Does this fit into your company strategy? Knowing what you want to achieve and how your company benefits from it is key here.
When considering a large investment it’s wise to have a detailed market analysis done. This analysis should include a detailed overview of the other players within your market. This should include their financials as well as possible synergies that could be created. Based on this information, a more informed overview of the value of each target will be understood. The analysis will also tell you what each target can bring to the table.
In some cases there are a larger number of players within your industry. In this case a detailed analysis of every player would not need to be done.
Legal and Tax Procedures
Knowing the Legal and Tax Procedures within the country you are seeking an acquisition is a fundamental part of preparing to buy a business. C.R.E.P. has a large network of professionals within your country of interest we can work with should it be needed.
In some cases you will need to get approval from your shareholders. Or maybe in your case it’s your board of advisers. Either way getting a formal Thumbs Up prevents people playing the blame game should things not go as planned. When having talks with your shareholders or board of advisors having documented rationale makes all the difference when trying to get your point across.
Through our vast network and data base we are able to find a company for acquisition that meets your requirements. If needed we work with industry specialists to further assist the acquisition process. This process can be a lot for a management team to handle and will most lightly require assistance from M&A advisors. It often happens that we end up working alongside your buyers managment team. Please keep in mind that this process does cost us time and money.
A high level of valuation of the target company is extremely important. You want to know exactly what you are buying. During your preparation you should have created a profile with a financial footprint of the type of company you are looking for.
Once the valuation exercise has been completed and you have a more in depth idea of what you need to acquire in order to achieve your goals. It’s time to think about the financing alternatives available to you. You should know how much of the project can you finance yourself and how much of the project will require external financing. We at C.R.E.P. have the capability and experience in providing you with the financing you need. Contact us to know what financing options we have available.
These are some of the main preparations that we advise you do before a business acquisition. For a more in-depth look into Buying a Business read: