FAQ Buying A Company
FAQ About Buying A Company – Successful Acquisitions Don’t Just Happen
Quick Points on Boomers Buying a Company
Good mergers are like good soup. Make sure you have a good recipe and don’t eat until the flavors have a chance to mix and mature.
More sales don’t necessarily bring more value. More valuable synergies bring more value.
Acquisitions should be like romances, not seductions. In seductions, all too often the truth gets lost in the passion of the moment. Romances give you time to think.
What’s your timeline. While we Boomers want to live forever, it isn’t going to happen. When considering a new acquisition, think about how long it will take to get what you want from it. Then decide if you want to go forward.
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How long does it take to find a company to buy?
A lot depends upon how specific you are with your buying criteria and the number of companies that are a fit. The more narrow your criteria, the fewer potential prospects. Also, you should not limit your search to companies on the market. They say, “Everything is available for the right price.” If you find a company you like, find out, or have your team find out, if they would consider selling.
If the “numbers” look good but I still don’t feel good about a deal, should I just trust the numbers?
Trust your “gut!” Anytime you don’t feel good about a transaction or about the overall deal, walk away. Better to have missed what might have been a wonderful opportunity than to give yourself ulcers or start off with serious doubts. Even if you have the best advisors in the world, remember that they don’t have to run the business after the purchase. You do. Besides, numbers represent facts. There are always lots of facts. The truth is another matter, altogether. Find your truth and you will be off to a great start.
How can I determine the true worth of a business?
The bottom line is that any acquisition is worth what it is worth to you. It could me worth more or less to someone else. Look at what you are buying very carefully and see what kind of cash flow the business will throw off as part of your larger entity. If it makes sense, go for it.
Is it possible to buy a company largely with its own assets and/or someone else’s money?
It’s both possible and commonly done. It is most prevalent with smaller deals, or when a company is in trouble, but your commitment to the purchase will be measured both in terms of how much of the purchase price you put up and how much you guarantee. Partners, lenders, investors and venture capitalists all want to see the principal fully committed and with enough money to guarantee a good likelihood of success. You may get in cheap, in terms of monies up front, but you will normally be on the line for a whole lot more.
How long does it take to buy a company?
There is no easy answer to this question. Once you find the company, which may take a very long time (even years) conducting due diligence and agreeing on terms (including lining up any financing). Once you have a deal it can usually be completed within 60-90 days.
John Reddish works with entrepreneurs CEOs and other leaders who want to master growth, transition and succession to get results faster, less painfully and in ways that work for them. For information and/or additional similar content go to: www(dot) getresults(dot) com, or call 1.800.726.7985.
