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 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.

"In my Decision Associates Peer Group, I learned to truly 'think outside the box' and consider new avenues to grow my business. The experience was invaluable. while our group members came from different industries, we looked to each other for advice, encouragement and support to address the issues in our own companies. Decision Associates challenged us to address the issues that were tough but had the most impact on our business. I feel strongly enough about it that I have asked my boys to become part of this upcoming peer group; it will be one of the best things I can do for their growth."

~ Jim Willats, President
Machining Concepts

Subscribe to our Decision Point Newsletter