Many entrepreneurs are considering a merger or an acquisition as part of their business strategy due to the availability of fast working capital and economic development. This sound likes a great deal, but before you make an acquisition, there are things you should consider. Here’s an entrepreneur guide to business acquisitions.
- Make Sure Your Foundation Is Solid
Many businesses owners like this idea of a merger or contemplating a new acquisition as there’s so much undertaking, but mostly finish up failing within few years because lack supportive foundation or move too quickly. Before making an acquisition, you need to make sure you have the resources and infrastructure if a deal flounders or the industry falls out of favor.
It’s important to determine the solid foundation of your business before making an acquisition decision. Make sure you have the adequate capital, time and resources for a successful business management. Today, aging workforce has become a major challenge for financial services industry. As stated in Financial Advisor magazine, there are 43% of financial advisors that are over the age of 55. The availability of younger advisors with sufficient knowledge and skills isn’t much to replace. This huge gap can lead to wrong mergers, since the financial advisory firms don’t have the required expert workforce to offer the same service level and advice.
- Make Sure Core Values Support Your Business
An exciting interaction with the workforce is vital to the achievement of a successful contract. Most business owners take a holistic approach and the same approach usually necessitates extensive communication and personal meetings with both the seller and the key personnel’s. Such interactions help buyer to recognize the potential company’s culture, and establish a rational alignment to make a smooth switch. Businesses that make acquisitions frequently focus on the acquisition mathematics rather on culture and people.
- Understanding The key Employees Importance
According to a research, businesses loss just about $11 billion annually by reason of employee turnover, and 75% of job quitters refer their bosses as the reason. So, based upon these figures its important to gain trust of your employees to help reduce the risk of losing key resources. Always stay committed to your key employees and appreciate their contributions towards business goals. Precision is necessary, and there should be enthusiasm to work with these key resources on service contracts, retention bonuses, etc. as the same will work a long way for the future business growth.
- Always Perform Due Diligence
Before making an acquisition, make sure you do evaluate the business’s performance history and portfolio to confirm its value and make known warning signals that might become knotty in the future. The list of items that you should investigate include business current assets and liabilities, employment & vendor contracts, compliance records and demographics, equity arrangements, business leases, bonus programs and credit history.
- Impact Of Acquisition On Business Future
The main purpose of any acquisition is to gain a competitive edge in the marketplace. You need to recognize the impact of your acquisition on the future of your business. There are items you can consider like access to new markets and new technology, access to new business lines, or gaining intellectual capital for growth etc. From a strategic standpoint, you should assess these key areas all through the decision-making process. An acquisition can make or break your business so, make sure you do evaluate all these factors before making your exciting acquisition.