Business Acquisition Services For Successful Business Acquisition
Starting your own business usually means years spent developing the company from the ground up. Purchasing or acquiring a business is the fast-track option to growing a business that someone else has already started. It can also provide some protection to the new business owner. Approximately 20% of small businesses fail in the first year, and within five years of operations, about 50% fail to stay open. It is possible to purchase a business further into its life cycle and outside these areas of high risk.
Prospective business owners find that when they buy an existing business, they experience a few immediate benefits. It is easier to obtain financing for an established business, there’s an apparent reduction in startup time, and you already have a customer base.
The process of buying an existing business can be less expensive than starting your own company and presents less risk. After you’ve chosen to buy an existing business, you can begin your search through business for sale listings.
Where do you start? Many people face the problem of not knowing where or how to start finding businesses available for sale. You need a plan and reliable resources to begin your search for your future business. Then, with the support of business acquisition services, you can follow through with the acquisition.
Make a Well-Organized Plan
Before you start searching for your perfect business, you need to write out your well-structured plan. Start your planning by evaluating your skillset, talents, and passions.
- Make a list of your strengths, weaknesses, interests, passions, and preferred business opportunities.
This list will help refine your search by directing your focus toward businesses that you could operate successfully. You should know what you’re looking for and not waste time considering companies outside of that range.
- Define your budget and how you plan to source your funds.
You don’t want to find the business of your dreams only to realize that you can’t access the right funding. When searching for a business for sale, you’ll want to match your resources to suitable listings. It is a futile effort to search for companies without the financial means to fund the acquisition. Business acquisition services can help you set your expectations and explore your financial availability.
You don’t need to have all the cash necessary to purchase a business. However, you do need a list of funding options to help close your acquisition transaction. Funding options usually include loans from family or friends or small business loans through financial institutions.
- Establish base-level expectations from the company
After an acquisition, the new business owners will certainly have plans for changes within the company. However, there are some red flags or potential setbacks that can surface before the acquisition. For example, if the company is far behind in technology and using outdated systems, it might take a substantial investment to bring the business up-to-date. Is that something you’re willing to handle?
Consider These Factors When Crafting Your Plan
As you build your plan, you’ll want to weigh these factors. They can change your decision on which business opportunity is right for you or help you decide that it’s time to move forward.
Why is the owner selling? It is mission-critical to understand the seller’s motive. Some motives are entirely harmless and can even put your mind at ease.
Baby Boomers own 2.34 million small businesses throughout the U.S. As more of these owners retire, they’re looking to sell their company to someone who will continue their legacy.
However, owners may have different reasons for selling. The business may have tough competition, take up too much time, or not have the ability to move forward.
You can’t plan on why the owner is selling, but you can create contingencies to handle different situations. When planning, consider what you would do if you found a great opportunity with suspicious seller motives.
How Profitable is the Business? When looking at business sales listings, you’ll need to evaluate their financial mileage. Look for companies that show a consistent increase in profit, with bonus points for products or services that stand apart from their competitors.
When evaluating the financial health of the company, focus on profitability over sales. Other metrics to consider are their cash flow and liabilities. A profitable company drowning in debt is not in a good position.
What legal agreements would you need to fulfill? Legal elements are a frequent pain point of acquisition negotiations. Will you have to meet certain legal obligations such as outstanding contracts, or will those need closure before the transaction? Some of those legal attachments could be beneficial, such as development agreements, but others may be arduous.
When planning, you want to establish what you can and cannot handle. With qualified business acquisition services, you should have access to a business review and full valuation to explore these types of challenges or complications early into the process.
Does their framework fit your needs, or would you need to change it? Think about the elements of operations that bother you the most. Is it bottlenecks or bad management tactics? Give weight to your framework pet peeves. Making this list can help you determine if a company is a good fit based on their framework. Some things you can fix, such as overcomplicated workflows. If there is a pressing problem where every process has excessive time-waste or extreme bottlenecks, then those problems might be symptoms of a larger issue.
The framework can play a substantial role in success after an acquisition. Challenges can arise even when a new owner acquires a business with an outstanding management team and framework. In many cases, a new owner simply cannot replace everyone who underperforms due to work culture or workplace politics.
As you build your plan, you want to consider possibilities. Focus specifically on the best-case and worst-case scenarios. Your plan will act as a guide. It does not mean that you won’t consider a great opportunity simply because it doesn’t fit your best-case scenario plan.
Utilize Online Resources to Explore Sale Listings
You can shop for anything online, and that’s even true for business listings. Online shopping has become the way of life because it offers more convenience, and for those looking to buy a business, privacy. It could mean that you can expand your options more than what you might have experienced through traditional routes.
When you want to increase your opportunities for finding the ideal business, an online search will always bring about fruitful results. In a few clicks, you can have a list of companies ready for a new owner.
Shopping around online and having those listings available at your fingertips can save you a ton of time and energy. Most business for sale listings will have some basic performance and financial information, so you can quickly cross off a few options or highlight others for further review. You no longer have to go around inquiring about businesses for sale.
These listings provide just enough information to allow potential buyers to get a sense of the business. Many will not provide detailed reports until you’re ready to take that next step and initiate contact. Another benefit of having so many listings available side-by-side is that you can easily compare essential data from different companies.
You can search based on the criteria you determined in your planning from the comfort of your home or office. That means you’re not spending money on travel or unnecessary expenses.
Engage Business Acquisition Services
When purchasing a business, you have a few options available when choosing your business team. You could rely on an accountant and attorney, which would likely work independently. Or, you could rely on Merger & Acquisition Advisors that provide a full array of services.
During a business acquisition, an accountant would only review financial documents to verify accuracy. They would also ensure that the documents such as P&Ls and tax statements were prepared well. However, they would not offer much assistance past this one critical step.
An attorney would also fulfill some necessary elements in purchasing a business, but they would not offer all of the services you need. These attorneys would provide proper contracts for business acquisition and reduce the buyer’s liabilities.
However, Merger & Acquisition advisors deliver a full menu of services, including:
- Review of financial documents for accuracy and completeness
- Business review
- Comprehensive business valuations
- Term and price negotiations
- Deal structuring
In addition to fulfilling these responsibilities, they serve as a facilitator throughout the entire acquisition process. Hiring these advisors does come with some expense. However, their expertise in business sales is beyond value. Buyers who work with these advisors increase the likelihood that they will buy a business at a lower price, with better terms.
Through using business acquisition services, you can cultivate a successful acquisition. At American Fortune Business Acquisition Services, that is exactly what we do. Contact our experts to learn more about finding the right company for you and how to get started with making an offer, negotiating, and obtaining funding.
To learn more about American Fortune Business Acquisition Services click here.
American Fortune has assisted clients in the following areas of the USA: Columbus Ohio, Atlanta Georgia, Lexington Kentucky, Bowling Green Kentucky, Nashville Tennessee, Memphis Tennessee, Cincinnati Ohio, Dayton Ohio, Toledo Ohio, Los Angeles, Cleveland Ohio, Pittsburgh Pennsylvania, Baltimore, Maryland, Indianapolis Indiana, Chicago Illinois, Detroit Michigan, Flint Michigan, Tampa Florida, St. Louis Missouri, Kansas City Kansas, Des Moines Iowa, Minneapolis Minnesota, Louisville Kentucky, Oklahoma City, Oklahoma, Dallas Texas, Fort Worth Texas, Denver Colorado, San Francisco California, Salt Lake City Utah, Phoenix Arizona, Lexington Kentucky, Los Angeles California, San Diego California.