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What are the steps in a business acquisition?

Discover the general steps a business owner must take when acquiring another business. Learn about important aspects to ensure a good deal.

Acquiring another business can be a good step for a business owner looking to grow and expand. Finding a business to acquire may not be too difficult, but ensuring it is the right fit is the tricky part. A business owner needs to take certain steps to ensure that he or she is making the best choice with a business acquisition.

Determine your needs

Entrepreneur suggests that the first step a business owner should take is to assess his or her needs. Not every acquisition opportunity will work with the current path a person and business are on. A business owner must decide what he or she wishes to accomplish and if the acquisition fits into those plans. Failing to determine needs before embarking on a business acquisition can lead to regrets and financial issues.

Conduct research

Once a person determines that a business acquisition does fit within his or her plans, the next step is doing some research. Home Business Magazine explains that research needs to encompass a complete review of the business’ finances, public image, management and operations. This step will help a person understand the true nature of the business and allow his or her to uncover any potential issues that could derail the acquisition.

Negotiate an offer

The third step is where the business owner will seek out financing and determine what a fair offer is for the other business. At this point, the owner should ensure the offer is fair and understand there will likely be back and forth negotiations to reach the final deal.

Draw up a contract

Once negotiations are over and there is an agreed upon purchase price, the two businesses need to create a contract. There will be additional negotiations over this. The agreement may include various conditions, such as not firing current employees or honoring employee agreements. In general, though the contract will cover the financial aspects and the handing over of the business from the old owner to the new owner.

Once a business owner goes through these steps, the only thing left to do is to institute his or her own team into management positions in the new company and begin running it. However, making it through the steps in the business acquisition is not easy. It is a process that requires a lot of legal agreements, so a person should at least consult with an attorney who has experience in business law, such as Mahaffey & Gore, P.C.