American Fortune Business Acquisition Consultants Serve Companies in Successfully Executing Business Acquisitions
We know how important it is for you to make a business acquisition that matches your skills and personal goals. Past clients have greatly benefited from our knowledge of contracts, mergers, acquisitions, negotiations, and deal structuring, using our expertise to complete their ideal business acquisition. We also expertly value businesses and help clients buy businesses at a fair price and terms. We also offer packages for business valuation reports.
American Fortune Business Acquisition Consultant Services helps the following groups make successful business acquisitions: investors, financial business buyers, industry buyers, individual business buyers, and strategic business buyers. We help them find, evaluate and purchase all or part of their desired business through our unique “Business Acquisition Consultant Services and Solutions:”
• Development of business buying parameters to drive the search for a business acquisition
• Target screening of potential businesses for sale prior to contact
• Encourage tentative yet attractive sellers by eliminating obstacles such as unrealistic valuations and concerns with employees, suppliers and integration
• Negotiate and structure deals to benefit the business buyer
• Seek out innovative, non-traditional financing (debt and equity) for a business acquisition
• Continue to serve our clients with ongoing financial services
• Search for companies through our vast network of business owners, private-equity groups, fund managers, investors, and industry associations. We present clients with a pool of qualified companies that are unavailable for purchase by traditional business acquisition services.
• Develop strategies to ensure the client receives a timely and successful business acquisition and integration plan
• We do not reveal our buyer client’s identity to potential business sellers until or our buyer client approves of the targeted business.
How to Prepare For a Successful Business Acquisition
How to Choose the Right Business Acquisition
Choosing the right type of business acquisition services depends on three factors: 1) The complexity of the business’ purchasing parameters, 2) The asking price of target businesses (Consultants can convince sellers with unreasonable selling prices to lower their price via defensible valuation and effective negotiation.) 3) The number of services to be rendered by the merger & acquisition firm.
American Fortune Offers Three Business Acquisition Consulting Options:
1. Business Acquisition Analysis & Advisory Services: This service is suited for small business with revenues of $3 million. This service includes a Calculation of Value Report (33-35 pages), business review and analysis, and deal structuring recommendations of the target business. Includes up to 35 hrs of services. The price for this service is $6,000.
2. Comprehensive Business Acquisition Consultant Services Program: This service is suited for larger business with revenues greater than $3 million. This program includes a Comprehensive Business Valuation Report (43-50 pages); value analysis; financial analysis; evaluation of ROI, financial and cashflow projections; business due diligence; deal negotiation; and deal structure. Includes up to 55 hrs of services. The Price for this service (including Support & Advisory Services) is $10,000.
3. Custom Acquisition Services: This program offers a customizable option for clients seeking a consultation package other than the aforementioned services. The price will be quoted once the client has defined its custom package.
4. Business Acquisition Consultant Services: We also offer our M&A Services on a hourly basis of $200 per hr.
Conducting Due Diligence in a Business Acquisition
Due diligence on a business acquisition is typically divided into two stages. A preliminary due diligence is performed prior to making an offer and will include a review of general company information and detailed financial records. In an Offer to Purchase, the buyer should list numerous contingencies that would prevent purchase, allowing an “out” if the target business does not meet one of the contingencies. Upon the seller’s acceptance of the buyer’s initial offer, the buyer will conduct a second phase of due diligence in which they review and audit information pertaining to the target business. We highly recommend that buyers utilize the services of consultants, such as accountants and attorneys; however, buyers should note that attorneys and accountants are primarily concerned with legal and financial liability, so they will most likely be overly cautious in recommending a business acquisition. Ultimately, buyers must independently analyze the attorneys’ and accountants’ recommendations, review business’ data, and determine whether the acquisition meets the buyer’s own goals. Qualified Business Acquisition Consultants can help the client through this complicated process, resulting in exceptional pricing and buying terms.
Securing Financing for a Business Acquisition
Banks are leery of financing business purchases, especially for borrowers with marginal operating experience with the target business. Most businesses have few hard assets to serve as collateral for loans, because their assets’ “worth” is in their continuous and profitable operation. Banks do not want to operate the business in order to secure repayment, because they are in the business of lending money – not operating business enterprises.
Small Business Administration (SBA) backed loans are available to fund start-ups and business acquisitions. However, SBA loans can be difficult to obtain due to financial, operational and collateral issues. The buyer can investigate SBA loans through a local banker or visit SBA’s web site at www.sba.gov for information on current lending requirements. Business acquisition loans are easier to obtain when combined with seller financing and earn-outs. Financing can be structured as a traditional loan with normal repayment schedules or as an earn-out with payments based upon future revenues. Seller financing and earn-outs provide the buyer assurance that the seller has a vested interest in the buyer’s ongoing business success.
A Smooth Transition in a Business Acquisition
Buyers purchase existing businesses to benefit from their income stream and established relationships with employees, vendors, and customers. Buyers may also purchase a business to benefit from the seller’s experience. Unfortunately, in the acquisition of smaller businesses, the seller often does not maintain written policies or procedures, resulting in limited operating knowledge for the buyer. Thus, a buyer must negotiate for the seller to remain with the business for a certain period of time to benefit from the seller’s operating experience. The acquisition of an existing business requires careful consideration. The buyer should utilize business acquisition consultants, conduct a thorough due diligence of the company, negotiate seller financing, and try to absorb the operating knowledge of the existing owner.
M&A transactions are extremely complex, often presenting legal and financial issues that can overwhelm inexperienced buyers. Most of the issues surrounding M&A transactions fall in one of seven categories:
• Poor and or little planning
• Unrealistic project assessments
• Improper allocation of time
• Poor resource utilization
• Lack of solid business tools
• Limited business information and data
The occurrence of any one or a combination of these circumstances has the potential to derail even the most promising M&A opportunity.
Challenge: Uncover “Synergy Savings” to Prevent “Deal Fatigue” and Post Acquisition or Merger Business Problems. M&A transactions often fail because of an inability to identify potential areas of “synergy savings” early in the discovery process. “Synergy savings” are areas where the newly-merged organization achieves substantial cost savings, and are thus great impetuses for business mergers. When “synergy savings” remain undiscovered for a long period of time, the potential for “deal fatigue” is heightened, increasing the likelihood that one or both parties will fail to complete the deal. Therefore, it is imperative that both buyers and sellers quickly present information resources and tools that will uncover all synergy savings opportunities, allowing the discovery process to move forward and the M&A transaction to succeed.
Solution: Control Information to Accelerate Decision-Making & Business Plan Implementation
Controlled information access ensures the secure use of critical business data and information management tools that balance the needs of both buyers and sellers during the M&A process. This accelerates decision-making and post-transaction business plan implementation. Controlled access also provides buyers with the timely and accurate information necessary to determine the overall viability of the transaction. This system’s security allows the seller to prevent proprietary information from falling into the hands of competitors, customers, suppliers or employees.
The Importance of “Synergy Savings” in the Merger & Acquisition Transaction Process
A merger or acquisition allows a buyer to get closer to a targeted customer base, helping improve the existing supply chain and providing greater access to capital. However, poor time management can prevent the realization of these M&A benefits. If clients do not evaluate future deal markets, areas of synergy savings, and corporate spending priorities within a reasonable amount of time, they will fail to realize optimum profit from their M&A transaction. According to The Art of Merger & Acquisition Integration by Alexandra Reed Lajoux, businesses must realize approximately 4% to 6% in synergy savings within the first 12 months after the consummation of a merger or acquisition. For example, if the size of the transaction is $50 million, then the buyer needs to obtain approximately $2 million in synergy savings within one year for a successful M&A transaction.
In addition to uncovering synergy savings, successful Merger & Acquisition transactions must also coordinate a diverse set of people, processes, information, and tools in order to quickly identify process challenges and prevent mistakes. Success in leveraging these highly effective resources can help both parties quickly reach a mutual agreement.
Buyers need a system that provides rapid access to critical, time-sensitive information so they can better evaluate the overall value of transactions. At the same time, sellers need a system that provides them with controlled access to decision-related data to ensure that intellectual property and proprietary business information used during the negotiation period does not fall into the wrong hands. Experienced Mergers and Acquisitions consultants ensure that both parties receive the information necessary to complete a transaction while keeping sensitive proprietary information confidential.