Business acquisition is acquiring a business to add to the current strengths or weaknesses of an acquiring business. Sometimes, this refers to a merger but more specifically to join the interests of both merging companies into a new stronger one. The term was first used in the United States in the early 1900s to describe the merging of Standard Oil Company with American Telephone & Telegraph Company (AT&T). The new company created was made up of several companies.
There are two primary factors to consider in a business acquisition, namely the financial and strategic objectives. When looking at either separately, it is not uncommon to find the acquirer with a mixture of emotions; fear of unknown and fear of known. This is because the acquirer must have a plan for how he/she will finance the acquisition and how he/she will sell the acquired entity to the target company that best matches its own goals and market position. The key to success in an acquisition is finding the right business acquisition services to assist you with these tasks.
One of the most critical steps in business acquisition involves identifying potential target companies. Identifying target companies means determining which companies may be a good fit for investment. You should review the financial statements of each target acquisition candidate. Look for opportunities in the company that may be of interest to your company’s management team. For example, if the target company produces a niche product or service under-served, you may want to purchase a company that already has a presence in that under-served market segment. Similarly, if your target company provides software applications that are unique or top-of-the-line, you may want to purchase a company that offers training programs related to these technologies.
Once you have selected acquisition candidates based on their financial health and suitability for your acquisition needs, you must identify the financial and other factors that will support those candidates during operation. Identifying and documenting acquisition-related business factors can be a complex and time-consuming task. In some cases, it is best to hire a business entity that can conduct the required documentation and integration for you. One such entity is a business acquisition finance manager. A business acquisition manager (or simply a BFA) will provide you with the information needed to make an informed decision about acquisitions. As you consider business acquisitions, keep in mind that the most important thing to remember is that quality doesn’t always come cheap.