Dr. John Psarouthakis, Executive Editor of www.BusinessThnker.com, is the Founder and former CEO of JP Industries, Inc, a Fortune 500 industrial group. that acquired 28 operations in USA and western Europe before merging with T&N, a British group.
Because the content of this article is still relevant today as it was in 2009 when it was first posted we are reposting it today.
The successful mergers and acquisitions require a great deal more than just analysis of the financial statements of the candidate. Digging in deeply in the operating details and asking the right questions is a fundamental component of evaluating the candidate. A very involved and intense discussion of all aspects of the business is necessary.
The M&A team will be faced with many challenges and numerous time-critical deadlines and milestones to be met. Customers want to know what is going on, suppliers similarly. During the early stages of the integration process the board’s executive committee must closely oversee and evaluate the effectiveness of the process..
Continue reading A Few Notes on Mergers & Acquisitions
If you are buying a business for the first time, you will find that buying a business is a unique experience that requires extensive knowledge and skills in a broad spectrum of areas–legal, accounting, banking, financing, understanding of government regulations, especially in areas of environment, safety and employee relations. You must learn how to obtain and screen leads, how to evaluate and price prospective companies, and how to conduct due diligence. But even highly experienced entrepreneurs who have completed dozens of deals still rely upon professional expertise for certain phases of the process. Thus expect that even after you learn more about the deal-making process, you will still need to hire consultants to assist you in making a successful purchase.
Buying a company is very demanding because it is an intellectual, pragmatic and emotional process, all in one. It is an intellectual process because to be successful you have to think it out. It is a pragmatic process because you have to be realistic about the company you are looking to buy, whether it is worth buying, what its real value is, and what it should be priced at. And buying a company, finally, is an emotional process. Throughout negotiations, beginning with first contact with the seller and continuing through to the closing of the sale, you experience tremendous highs and lows. You must be able to handle both extremes of emotion. You must handle the highs, so as not to reveal your enthusiasm to the seller, and after the lows, to be able to come back and find a solution to the problem that might otherwise kill the deal. The emotional component holds true even after many deals but you do learn to control those emotions with practice.
Reasons for Buying Your Own Business
Some of the reasons for buying your own business are similar to those of any entrepreneur: to control your own destiny; the personal challenge, making money, the satisfaction of building and running something on your own. Continue reading WHO BUYS COMPANIES AND WHY
By Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation
This is the 15th of a Series of short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week
Here we briefly review the closing of the Acquisition deal. The key aspect of this step is the preparation and signing of the purchase agreement and other documents needed for closing.
Beyond the legal requirements of having a purchase agreement, the preparation of the document itself is an important aspect of the due diligence process. Because of the representations and warranties a seller is obligated to vouch for, frequently, problems surface during this period that you may not otherwise uncover. For this reason, it is very important to begin work on the purchase agreement as soon as the letter of intent is signed and you begin formal due diligence.
Continue reading Briefly Reviewing the Closing of the Acquisition Deal