7 things to consider when making an acquisition

Whether you’re acquiring another company, or if a company is acquiring you, there are a few things that all business owners or partners should consider before making the final move. Acquisitions can be a smart and strategic idea, but if not planned carefully, could end up a total bust! Here are seven things to consider when making an acquisition to give you some ideas for your next move.

Costs

There are a lot of costs involved when acquiring another business, and if you’re not careful, things could get ugly pretty quickly. How will your two companies make a profit? Will there be any additional investments you’ll have to make? Can you handle the salaries of all the employees combined? Take some time to go over your finances and the finances of the other company. Make sure to investigate the background of the new company. A full audit is truly ideal to check for any lawsuits, bankruptcies, etc.

A good match

Opposites don’t always attract, at least not in the business world. Most likely the company you are acquiring will have its own way of doing things. Before you decide to become one, you’ll want to do some research on the other company’s culture.

When acquiring another business, the company culture plays a major role in whether the acquisition will be a success or a failure. Drastically different company cultures can create tension, confusion and disorganization. You’ll want to cover all of the tiny details as to how the other company runs its business and decide if it would be a good match for your company.

Defining roles

When you make an acquisition you already have employees, but you’ll also be gaining even more. It’s important to know how many employees the other company has, what each of their roles are and which departments they work in. Decide if each department has an efficient amount of people, if some employees will be willing to move departments, or if new departments need to be made. Also note that upper management roles might also change. Is the boss okay with becoming a regular employee? Or will new CEOs be assigned? Defining these roles ahead of time will help to prevent any confusion among your workers.

Goals

Establishing the main objective of the newly combined companies is important before making the acquisition. You will want to make sure that everyone is on the same page and that the two companies will mesh together well. How will you make a profit? What are the benefits of acquiring the new company? What are the two companies trying to achieve by working together?

Proactive planning

You don’t want to acquire a business without thinking ahead. When two companies come together there will be a lot of different aspects to consider and you’ll want to make sure that you have covered everything before officially merging. That way when you’re ready to break the news to your team, you will be fully prepared to address any questions or concerns.

Choosing a company

It’s best not to wait around for a potential company to put up a “For Sale” sign. Instead be proactive about the acquisition and scout out any companies that you think would be a good fit. If the company you are looking to merge with is not for sale, then be ready to set up an offer and a solid reason as to why this acquisition would benefit them.

Competition

You’ll want to do your research to find out who your potential acquisition competitors are or will be. If their competitors are much more advanced than yours, and might be hard to beat, then that company might not be the best bet for your acquisition.

J. Michael Waters, Jr. is an attorney at Dismuke & Waters, P.C. He can be reached at (817) 749-0317 and [email protected].