Questions to Consider When Buying A Business

Questions To Ask When Buying A Business

If you want to buy a business, Decision Associates M & A suggests that your answers to the questions below will help identify the best match. The key to helping you determine a great fit is understanding your specific goals.

 Type of business

  • What type of business do you want to acquire?
  • What do you want to stay away from?
  • What is your overall acquisition strategy?
  • What will this business do for you?

 Scale of business

  • What scale are you looking for in terms of overall purchase budget?
  • What amount of annual sales do you want?
  • What number of employees do you want?

Ownership of business

  • Do you want to own 100 percent?
  • Are you open to a strategic partnership or investors?

Products and services of the business

  • Do you want to have proprietary products or services?
  • Are you looking for more capacity of products you have now or product extensions of your existing products?
  • Do you want new products of a type you don’t have now?

 Location of the business

  • Are you looking to reach new geographic regions (e.g., to reduce shipping costs or be near markets)?
  • Is there a limit to how far away you want the new business to be?
  • Are you looking to reach specific customers or types of customers (e.g., buying a company to get specific customers)?

 Acquisition strategies

  • Do you have or are you building toward a specific holding or group of companies?
  • Do you want a business that can run on its own...management team, facilities, markets, marketing, sales force? Or, do you want something that will use skills, facilities, marketing and more from your existing business?
  • Do you need the current owner to stay? If so, how long?
  • Do you have new leadership ready or would you need to find someone to run this for you?
  • Are you looking for a business that is on the weak side in terms of business performance, but that can be bought for a bargain and built up with your acumen and team?
  • Do you want something that has momentum and is in great shape to build upon?

Buyer strengths

  • What are the strengths of your current business?
  • What are your strengths and those of your existing team (or partners)? What challenges fit your skills?
  • What are the types of businesses that you have done best?
  • How close do you want to be to the business?  Hands on or more of a chairman?
  • What is your team’s intellectual property? What do they know and what holes can they plug in an acquired business?

Due diligence

  • Who is doing your due diligence?
  • How will you assess:
    • Financials, performance and capex history?
    • Markets, market diversity, market stability, market potential and competition?
    • Sales and sales channels?
    • Legal vulnerabilities, liabilities, warranty exposure and general legal history?
    • Organization and people?
    • Operations, equipment health, equipment suitability to market direction?
    • Systems and technology and quality infrastructure?
    • Overall facility condition, floors, layout, infrastructure, expansion capability?
    • Environmental challenges?

For a deeper understanding of these questions, contact Decision Associates M & A.

"My Decision Associates Peer Group was critical to my development as a leader. Within that environment of trust and confidentiality, I found solutions to issues and challenges that I would not have been able to resolve on my own. I think everyone in the room felt the same way; we all learned we have similar issues regardless of the business we are in. I believe the peer group to be one of the most impactful programs that I have attended throughout my career. I would recommend this to anyone who wants to really challenge themselves to be better every day."

~ Mike Chesley, President
Composiflex

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