In today’s current Economic Climate many businesses are electing to increase their growth by way of acquisition.
Whilst this strategy remains sound there are many considerations that need to be undertaken prior to purchasing an existing business, particularly if that business is in the same industry and/or profession you’re currently trading in.
The main key to any successful acquisition is undertaking the appropriate ‘Due Diligence’ prior to any contracts being arranged. Initially, “Commercial in Confidence” Agreements are prudent to be agreed and executed as this provides protection to both the buyer and sellers.
It’s been stated on many previous occasions however if the ‘culture’ of both businesses isn’t similar that it can make the combining of the two entities difficult.
Whilst there are many dollar savings that are able to be achieved as a result of business “synergies” the largest is always the savings made from duplication of staffing. Any successful unification of business’ places a great deal of emphasis on the ‘coming together’ of multiple businesses.
Some of the other cost savings that are able to be achieved are -: Lease & Rental duplication, Office Leases, Computer & IT Savings, Motor Vehicle duplication, Professional Fees etc.
As with all business acquisitions and purchases ensuring that the appropriate Sale Contract is in place is critical. It’s very important that matters relating to previous and ongoing taxation and other financial matters are succinctly dealt with so that neither of the parties is disadvantaged post-settlement. The early involvement of Solicitors and Accountants, together with any other Business advisors such as Insurance Brokers, will assist in the smooth transition of combining entities.