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Acquiring A Business 7 Questions You Need To Ask

If you are looking to grow your business by acquiring another business there are 7 questions you need to ask.

In this article we consider the questions that cover

  • Sums,
  • Actions,
  • Outcomes
  • Fit
Acquiring A Business 7 Questions You Need To Ask

Acquiring A Business 7 Questions You Need To Ask

  1. Why do you want it – this seems like a simple question but answering it truthfully will allow you to make sure that you are not just looking for a vanity purchase and have completely identified the rationale for the purchase
  2. Have you done your sums – so many acquisitions start with the desire to increase the overall value of teh organisation. So if we are a £20 million company purchasing a £5 million pound company grows our business by 25% . If only it was that simple it is critical that detailed analysis is completed to see if the acquisition will actually help in your growth
  3. Will it make financial returns – this links closely to point 2 in terms of will you be able to do things as a result of the business that will mean you will grow more profitably and faster than if you just grew organically
  4. Can you live with any outcome – if your acquisition is successful are you prepared for the pain and heartache that may follow the purchase
  5. Do you have a plan – so 100 days after acquiring the business are you absolutely certain where / how you will have progressed. A detailed plan of how you plan to manage the acquisition is a necessity
  6. How will it be fitted in – will the acquisition be integrated into existing operations or will it remain a standalone independent operation. In most cases elements of integration are required to allow for cost savings etc
  7. How long will you have to wait for benefit. It could be that you are simply acquiring in order to gain a customer list at which point you will transfer customers into the core activities. If you are buying IPR it could be many years before you see a return on investment

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Only 50% of acquisitions are successful

With only a 50% success rate on acquisitions there are 4 points to consider

  1. Follow the money
  2. Resolve any people or power issues “Fast”
  3. Ensure that the deal structure doesn’t impact on change
  4. Make sure that due diligence goes well beyond just the financial issues

Acquiring A Business 7 Questions You Need To Ask

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