Tag Archives: mergers

HOW TO BUY THE RIGHT COMPANY, 2nd

shakiing_hands
This is the 2nd of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week

An acquisition business plan needs to be developed before you begin your search to buy a company. Three overall categories of decisions need to be made.

  • Why do you want to buy a company?
  • What type of company do you want to buy?
  • How are you going to go about buying the company?

In determining why you want to buy a company, you should ask yourself and develop answers for each of the following questions:

  • Do you want to run the business yourself or do you want others to help you?
  • How long you plan to keep the business;
  • Whether you plan to buy other businesses over time
  • If buying additional companies over time, do you plan to buy related or unrelated companies?
  • In determining what type of company you want to buy, you should ask yourself, at the outset:
  • What industry are you interested in?
  • How large a company do you want to purchase and manage?
  • How profitable does the company need to be?Clarifying these issues in your mind will advance your efforts at selecting the appropriate company.

Reference: “How to Acquire the Right Business”
by John Psarouthakis and Lorraine Uhlaner

http://businessthinker.com/publications/ 

How to Buy the Right Company, 1st

shakiing_handsThis is the 1st of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week

Buying a company is by far one of the most complex purchase activities most individuals ever undertake. A far broader array of skills and knowledge is required than for any other purchase, certainly much more so than purchasing a house or an automobile. And although an infrastructure exists, the prospective buyer is expected to be familiar with many of the rules of the game before undertaking such a venture or he or she won’t be taken seriously. Fair or not, age provides a rough yardstick by which many prospective buyers are initially measured by the broker and banking community. Younger buyers must overcome issues of credibility. Senior buyers must deal with the concern that they lack the energy and/or are too close to retirement to take the project seriously and must overcome their own hesitancy to start over with a new company. In spite of these obstacles, adults in a very wide range of ages successfully purchase and run their own companies. Strong drive or desire, among all the personal characteristics is perhaps the single, most important ingredient in assuring their success.

Reference: “How to Acquire the Right Business”
by John Psarouthakis and Lorraine Uhlaner
http://businessthinker.com/publications/ 

18 Steps–Acquiring the Right Business

drjohn11aDr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, and Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation

One enters into a rather specific process when one decides to acquire a business and particularly the “right” business. You must manage and control the process if the result is to have a good chance to be the desired one. The acquisitions process involves several distinct steps and sub-steps that need to be attended to with extreme care and dealt with expertly and skillfully.

These steps are the following:

1.  Know what you want to acquire.

2.  Set up criteria to guide you on what you want to buy.

3.  Set up a plan on how you will proceed.

4.  Identify/build a team that will work, do, and manage the process with you.

5.  Develop a network of credible sources for acquisition candidates.

6.  Screen carefully and thoroughly the candidates using the criteria set.

7.  Conduct an effective preliminary evaluation/due diligence before you spend a great deal of time and money.

8.  Negotiations really begin at the first meeting with the owner or his/her representatives. Preliminary agreements take place then and should be included in a letter of intent.

9.  Involve your attorney early in the process and also with the letter of intent.

10.   Conduct a thorough evaluation/due diligence. Look for surprises, but do not panic.

11.  Develop a detailed action plan and complete it before you close the deal.

12.  Review the value and price of the business with your colleagues.

13.  Negotiate the purchase agreement with the full participation of your attorney.

14.  Close the deal.

15.  Have an all employee meeting in the acquired company very soon after closing, immediately if possible.

16. Present / discuss plan with the local management first.

17,   Begin implementation of the action plan immediately.

18.  Most important, meet as many people of the company as possible during the acquisition process. Do not wait to meet them after you close the deal.

Reference Book: “How to Acquire the Right Business”, Xlibris Corporation, 2009

To buy this book go to xlibris.com  or  amazon.com or e-mail a request to drjohnps@hotmail.com