Business Acquisition: Understanding the Basics
“Business Acquisition simply means buy and sell a business.”
Conducting a business is not simple but it does not have to be complicated. Business acquisition is a fancy term for buying and selling a business. Let us investigate this process and some of the terms that are frequently used in the market.
Business Acquisition Experts are professionals including business consultants who have years of experience in legal, accounting, leasing, and other operational matters.
Strategic acquisition means a purchase or sale of business with thoughtful calculation that brings out both buyers and sellers in the best position possible in a transaction.
Like business acquisition experts, acquisition advisors and business acquisition specialists overlook the whole process and have an in-depth knowledge of a particular industry.
Regardless of what industry you are in, the step-by-step process is similar, but the details are differing based on your business structure.
If you have a partnership structure, before putting your business up for sale, ensure all parties in the partnership are on the same page. If not, contact a local Business Acquisition Experts near you for advice to see what your options are.
If you are a sole trader, this process is simple as you are a sole decision maker. If you are a director of an entity, ensure your entity is solvent and all debts are paid up to date.
Note: Talk to your acquisition advisors and business acquisition specialists about the necessary steps to bring your book up to date. Or explode your options by contact an insolvency expert.
On the other hand, purchasers should have a business’s book reviewed carefully and talk to Business Acquisition Experts before making any offers for strategic acquisition.
Below is the step-by-step process for a sale and purchase of business, please note this is not set on stone but we hope it will give you a decent guidance to navigate thru the process:
- Research: It is best to choose the industry you have experience in. If you are new to the industry, seek advice from experts.
- Decide the way you operate: Will you run the business yourself or this is a share purchase, and you take a profit share of the business only? If you run the business, what is the structure? Will you keep the prospective business’s structure or will you refresh the business with changes.
- Lease: Is there a lease involved? If yes, when will the lease expire? What are the current debts/ benefits the lease is entitled to?
- Franchising: What sort of business model is this? Is it a Franchised store or corporate? Or is there any sort of license agreement in place for this prospective business?
- Employment: How is the business operating? How many people are employed and under what type of agreement (casual, part time, full time, or sponsorship)?
- Price Assessment: What is the reasonable price to buy or purchase of a business? Pricing is not set on stone and there is no guidance for one, so it is best to talk to Business Acquisition Experts to know the best price range. This leads to the next point.
- Financially ready: Are you ready to make a purchase? And how much will you need to cover the operation in the first few months plus the legal costs involved in the process?
- Fitout: Is there a refurbishment request? What do you need to do at the end of the lease? If so, what is the estimated costs, and will you have to shut the door during the Fitout period?
We hope this gives you a good insight before you embark on your research and initiate a sale and purchase of a business. If you have any questions, feel free to contact Brydanwoods
