Buying a business can be a big step forward – but can also turn out to be a big disaster even for large corporations. The main pitfalls to acquiring a business are the same no matter what the size of the business that is being bought.
In this section we aim to cover the aspects of approaching a target business, completion of due diligence, negotiating the purchase and settlement once the deal is complete. To visit a specific section follow the links below.
Approaching A Business With View To Acquisition
The primary aim is to convince the vendor that he really wants to sell his business to you. With this in mind the purchaser needs to establish that he is a credible purchaser.
The buyer should initially register their interest in purchasing the business. The target will usually have instructed professional advisor’s to sell the business therefore it is the advisor’s that should be approached initially not the management.
The advisor’s will require the purchaser to explain what their current business is (or the background of the purchaser if they do not currently have a business), why they are interested in that business, how they intend to purchase the business and if funds are currently available or how they will be obtained.
Integrity and future plans will often be extremely important to any vendor particularly if they have built their business up with the current workforce.
During discussions with the vendor and his advisors, the purchaser should attempt to evaluate whether the vendor needs to sell the business and if so what are the required timescales. Is money the prime motivation for selling and will the existing management and workforce remain involved in the business? These factors will have a bearing on the possible offer price.