If you have successfully built up an established business and you are eager to find ways to expand your venture even further, then an acquisition could be on the cards!
Acquiring an existing business can bring your company several significant benefits – not least, access to a steady customer base, established supplier contracts, and additional infrastructure including buildings and equipment. Acquisitions can also be a less risky and time-consuming option than starting a new sideline of your own from scratch, allowing you to scale up faster and more effectively.
But how do you go about finding the ideal business to add to your company?
There are several vital factors you’ll need to take into consideration to answer this crucial question and set your feet firmly on the path to acquisition success. In this illuminating guide, we will explore those factors in more detail and offer our insider tips and insights to help you choose an acquisition target that will provide the right synergies for your company.
Deciding on a sector
Perhaps the first question you should be asking yourself is this: do you want to expand your market footprint in your current sector – or do you want to expand into new service lines?
The answer to this question will govern what kinds of businesses you choose to explore as possible targets. You may prefer to only consider companies that offer complementary products and services to your own; for instance, perhaps you want to stop outsourcing a particular service, so buying a smaller business that specialises in this service will be a strategic choice for your company.
However, you may be keen to tap into new and exciting markets, especially if they have significant growth projections for the coming years. This kind of acquisition could prove to be very profitable; however, it can also be risky, as you may have to find your footing in an industry you don’t know much about.
Setting a budget
When it comes to making any kind of significant purchase – including an existing business! – it’s important to set a budget. This will not only help you to narrow down your list of potential targets, but it will also help you keep things on track financially.
To set your budget, you need to be clear about how much capital you have available to acquire with, and how much may need to be come from financing. You should also consider any current debts your business has if you will be seeking outside funding, as you don’t want to risk defaulting on any payments.
Sourcing those synergies
The sad reality is that many acquisitions fail to maximise their value in the long run.
One way to avoid becoming one of those uncomfortable statistics is to focus on potential synergies. In short, what does each potential target have to offer – and what can you bring to the table in return?
If you are excited about the products or services a particular company has to offer, not to mention the talent and expertise of its staff, then there is a greater chance of your deal succeeding. Similarly, if you know that you can bring significant value of your own to your acquisition, then it’s likely to be a more fruitful endeavour.
Is the timing right?
Before you forge ahead with verifying potential targets, it is worth your while to pause and reflect on your personal circumstances. While your own business may be in a strong position to acquire, you also need to consider your own status. After all, an acquisition is a complex, time-consuming and potentially difficult undertaking.
If you already have a lot of stress in your personal life, or if you are struggling with issues such as poor physical or mental health, then it may not be the best time to acquire. Burnout is a very real risk for business owners who focus on progress and growth at all costs, so you need to learn to prioritise your own well-being as well as that of your company.
Knowing where to look
If you’ve never bought a business before, you may find yourself wondering where to even start!
One way to find the right targets is to ask your network of contacts if they might know of any suitable companies that are being put up for sale. However, arguably the simplest method is to check out online listings. There are various websites specialising in advertising businesses for sale, and once you start browsing you should soon be able to come up with some possible candidates.
Of course, it’s important to keep in mind that the prices that are cited on these listings may not always represent the genuine market value of the businesses. This is why it’s important to have an independent valuation carried out on any targets you’re very interested in.
You should also consider that, just because you want to buy a certain business, it doesn’t mean the owner will be prepared to sell it to you! They may not feel that you have the right corporate culture to fit comfortably with their business, or they may have doubts about potential synergies. As a result
Hire a business broker
If you still have concerns about being able to find the right business to buy, then it might be in your best interests to hire a business broker.
A business broker can draw on their expertise and their widespread network of connections to help you find the perfect company. Not only that, but they will also oversee every aspect of the acquisition process for you, leaving you free to focus on running your own business while the deal progresses toward completion.
In short, having a business broker at your side throughout your acquisition journey will give you access to insider insights and advice, and save you a lot of time and hassle in your search for ‘the one’.
Harris Acquire – at your service
Here at Harris Acquire, our expert team is on hand to manage every stage of your acquisition – from finding the right target to managing negotiations and due diligence on your behalf.
To find out more about how we can help, don’t hesitate to get in touch by ringing 01926 757100 or sending an email to Hello@harrisacquire.com.
