What You Need to Know if You Are Looking to Acquire a New Business

As a business owner, you will likely be looking at ways you can ensure that your company will be able to grow, expand into new markets, and increase revenue. As you continue to pursue your growth strategy, you may want to consider acquiring one or more other businesses. A horizontal expansion may help you gain a stronger foothold in the marketplace, while a vertical expansion may help you avoid supply chain issues and provide you with greater control over the distribution process. 

Tips to Follow When Acquiring a Company

As you plan to acquire a new business, you will want to do the following:

• Set goals – It is important to understand what you want to accomplish by acquiring a company. You may be looking to improve efficiency, increase the scale of your operations, or acquire certain types of intellectual property or technological processes. By establishing clear objectives, you can make sure your acquisition will further your company’s goals.
• Do your research – As you look for potential targets for acquisition, you will want to establish financial criteria, including how much you are willing and able to spend to purchase a business. You can then research businesses that are available for purchase in different markets, looking at issues such as a company’s established client base and how well it can be integrated into your business’s operations. 
• Perform due diligence – After identifying a business that you may wish to acquire, you will want to fully review the financial details and other information that may affect the transaction. Reviewing financial statements, tax returns, contracts, leases, licenses and permits, and other important legal and financial documents will ensure that you will not encounter any unexpected surprises that could lead to financial losses or other issues in the future.
• Determine your financing options – While you may be able to purchase a business through a cash payment, there are other options that may be available depending on your resources and needs. In some cases, you may be able to receive financing from investors, or you may be able to secure a loan from a financial institution. You may also consider an employee stock ownership plan, leasing a company with the option to buy it in the future, or the assumption of a business’s liabilities.
• Create a transition plan – As you move forward with an acquisition, you will want to make sure you will be able to incorporate the new business into your existing company while ensuring that it can continue operating efficiently and profitably. You may need to renegotiate contracts, make adjustments to a business’s organizational structure, or make other necessary changes to your overall business strategy.

Considerations for Mergers and Acquisitions

Whether you are merging two businesses into a single business or purchasing assets or stocks from another business, the process can be complicated. Mistakes during the merger or acquisition process can hinder your business’s growth and negatively impact your bottom line. 

Contact Our Naperville Mergers and Acquisitions Attorney

If you are looking to expand your business by acquiring another company, the Gierach Law Firm can advise you on the best ways to proceed. We will help you understand the best ways to achieve your goals while addressing any legal issues that may arise during a transaction and ensuring that you take the proper steps to continue operating your business successfully. Contact our DuPage County business acquisition lawyer at 630-756-1160 to get the legal help you need.

Sources:

Inc.

DealRoom

Nerdwallet