Tag Archives: M&A

Plan Ahead in Your Acquisition Process


JP Bio PhotoBy Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com,  Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation

This is the 14th of a Series of  short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week

You can easily get so caught up in the acquisition process itself that you delay proper planning of the takeover until after closing takes place. This would be a big mistake.

Successfully executed acquisitions require months of planning prior to closing, to assure a smooth transition.

Much of the preliminary work overlaps with a properly done formal due diligence–extensive evaluation of the company and identification of potential problems.

The remaining work, some of which may be obvious and some of which might require more problem-solving creativity, involves identifying the necessary changes and improvements that should take place and an assignment of due dates, budgets and people responsible for carrying out these changes.

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Financing the Acquisition

 drjohn11aBy Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com,  Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation

This is the 13th of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week

Financing the acquisition requires thorough and careful planning. You need to consider the different sources of funding accessible to you.

The amount required for purchasing the company may dictate the types of sources that you seek out.

Some combination of debt and equity is likely. Be wary of overextending yourself with too much debt.

On the other hand, be careful to protect your immediate family by not taking too great a risk with your personal assets.

It should not be necessary to put your entire life’s savings up for collateral. If the deal makes sound business sense, if a bank or other lending institution starts making unreasonable demands, check out another bank, review your business plan, or try some other approach.

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Value and Price in acquiring a Business

shakiing_handsBy Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com,  Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation

This is the 11th of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week

In acquiring a company you must determine the value to you and the price you want to pay for the company / business you are considering.

Although four basic approaches, the profitability and multiple (price/earnings ratio)method, the asset method, historic cash flow and discounted cash flow, are all used, the discounted cash flow method is considered the most realistic valuation of the candidate company. However, a comparison of values from different methods can provide useful insights, especially in the early stages of valuation of the business.

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