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Business Acquisitions: Buying a Business
An acquisition is when you buy another business and end up controlling it.
A merger is when you integrate your business with another and share control of the combined businesses with the other owner(s).
A business acquisition can provide a number of benefits:
- The ability to sell products and services into complimentary markets
- Increased profitability due to combined overhead reductions
- Additional management and / or skilled labour force
- Increased geographic coverage
- Elimination of a competitor
Growth that is gained by a business acquisition is a key strategy of many businesses at some stage in their life cycle. You can aquire a company and build on their strengths or weaknesses. The right acquisition at the right time can increase the income stream and the value of the combined business. However many businesses do not have the capacity to project manage an acquisition from initial identification through to completion without significant disruption to the core business and a drain on management time.
Developing an acquisition strategy
Acquiring a company is a strategic decision that can have major implications for the future direction and structure of your business. From time to time seemingly attractive opportunities can present themselves, but successful company acquisition can't be based on impulse buying. You need to assess your target business, understand it's customers and interact with suppliers.
Profit margins, stock levels, information about it's marketing
are all issues to take into consideration.
You need to develop a clear selection strategy and you need to stick to it. You need to carefully and thoroughly evaluate each opportunity on well-defined, measurable criteria. With these in place you can begin a properly-focused search.
Identifying and approaching potential acquisition targets
In many cases you may have already identified the target company (or they may have found you). If this is not the case then the right acquisition may be best found through research and targeting potential vendors.
We have professional in-house research facilities, which include comprehensive databases, contacts with accountants, business-sale agents and corporate finance boutiques that regularly act on behalf of purchasers.
Once potential targets have been identified that match your selection strategy, we would then contact them on your behalf, as keeping you out of the picture at this stage offers the following benefits:
A professional and structured approach
- Increased likelihood of opening positive discussions with targets.
- A third party approach maintains confidentiality
- Enables you to concentrate on running your existing business.
- Cost effective. The majority of our fees are success based.
Negotiating with vendors
Once a business has been identified, we will negotiate a deal with the vendors on your behalf.
Financing the deal
If the acquisition cannot be funded comfortably from your own resources, then we are able to arrange the most suitable funding package on your behalf. This will be done in conjunction with our in-house Business Finance Brokerage, which enables us to access more specialist sources of finance, should it be required.
Managing the legal process
We will work with your solicitors towards the completion of the deal. If your solicitors do not specialise in Corporate Finance, we are able to introduce suitable solicitors to you that have a proven track record in this sector, having regard to the size and complexity of the deal structure.
Sterling Capital Reserve Ltd
Sterling House
10 Wheatcroft Business Park
Landmere Lane, Edwalton
Nottingham NG12 4DG
Tel: 0115 984 9800
Fax: 0115 921 5550
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