You’ve done it. You’ve successfully grown your business to the point that you’re ready to buy out your competition. You know the industry and obviously know how to grow a business, but what key elements should you focus on? We’ll cover the top 4 areas that you’ll want to address when considering a buyout.
1. Look for a Competitor to Buyout
When preparing for a buyout you have to ask yourself one thing: what is my core competency? For example, if you are a shoe store your core competency might be stylish business shoes. Therefore, when assessing a competitor, you must make sure that their core competency matches or compliments your own. If you are the shoe store, you might buyout a men’s suit store, briefcase store, or belt store. On the other hand, you might want to pass up the opportunity to buy out a business that caters to teenage skaters -a target market outside your successful existing business.
2. Do your Homework
A crucial step to any buyout is to do your homework. Review the financial statements, inventory, asset list, liability list, accounts receivable, account payable, corporate culture, leadership team, key employees. Have a friend, confidant, business mentor, or tax accountant spend time going over these as well. You don’t want to buy out the farm only to discover that the crops are bad. Walk through the fields, so to speak, examining everything closely and seek a second opinion before committing.
3. Plan for Departure
You are no doubt excited – as you should be. But odds are that the employees of the company you are buying out are trepidatious. Some will leave on their own and you will likely ask some to leave. The key is to maintain moral and trust with the survivors of the buyout for they will keep the show going.
4. Walk Away
Be able to walk away. You may fall in love with a company or the idea of acquisition too quickly. Don’t let the idea of buying out your competitor cloud your judgment. Proceed with the buyout once you and your advisors are sure that the acquisition will increase, enhance, or complement your business. There will be other opportunities for growth in the future, so be able to say “no” to the wrong courtship.
Once you’re ready to consider a buyout, find a team that can support you through the process. AtPayTech.com our team’s skill in accounting and HR can help you evaluate the financial and personnel health of the organization as well as navigate the financial merging and potential personal changes that are sure to come. Visit us online to find out more about how we can help you reach a new level of success.