4X Acquisition Strategy
The process of buying a business can be narrowed down to one very simple question:
Is the business you’re buying actually the business that you think you’re buying?
Some purchases are more straightforward than others. Often, this is reflected in the type of business you are purchasing.
If you have a thorough understanding of the business you are buying, then the process will be smoother.
Businesses are continually bought and sold as a result of an opportunity being made available or because of a strategic plan.
Larger corporations buy businesses to take out a competitor, increase revenues, market share or even purchasing power.
The process of buying a business – whether it’s a manufacturing company, Internet Company or accounting firm – is the same.
You’re buying an established business that’s hopefully making money and has customers and employees already in place. You also know that if you buy a good business, you have the opportunity to make it a better one.
Here are Ten steps we typically follow to build our acquisition strategies:
Step One: Defining the business you want to buy
Step Two: Targeting the business
Step Three: Preliminary due diligence
Step Four: negotiating the price
Step Five: Business Valuation
Step Six: Heads of Terms Agreement
Step Seven: Due Diligence
Step Eight: Sale and purchase agreement
Step Nine: Paying for the business
Step Ten: Completion
It can take many months to go through this 10-step process, but it’s worth being patient and thorough – because the stakes can be incredibly high. Throughout the process, you should always be prepared to walk away, however, expensive or painful it might be to do so. The pain and expense will pale in comparison with going ahead and buying the wrong business.
An Acquisition could be the costliest mistake you’ll ever make.