Business Takeover: How to Proceed with a Business Acquisition

When we talk about taking over a company, we are referring to an entrepreneur who takes control of a company that is already up and running and present on the market. This is a useful option to avoid starting from scratch, given that – going beyond the expense required for the acquisition – the overall costs are lower than those incurred when starting a company from scratch. We are talking above all about the lack of necessary expenses in the start-up phase. Clearly this solution does not always equate to a successful choice: it is if that company is well positioned, but it is not when the company being acquired is in full economic crisis. Let's see how to move in the best way in these cases.

Preliminary factors to evaluate

Based on the discussion above, before acquiring a company, it is necessary to proceed with the analysis of a series of factors, which are fundamental to understand whether that deal can become profitable or not. First of all, it is necessary to obtain a series of detailed information on that company by requesting the Chamber of Commerce certificate, a very important document to have access to. Secondly, it is essential to proceed with the strategic audit, which consists of studying the reference sector, the competitors present, and the market prospects. The analysis of the strengths and weaknesses of the company in question is also part of this preliminary step. Naturally, it is equally important to evaluate the convenience of the acquisition price, establishing an appropriate budget beforehand, based on the information gathered during the audit. Unfortunately, determining the value of a company is always the most complicated step, but it is still possible to negotiate with the seller and seek a compromise that is valid for both.

How to proceed with the acquisition

Before the actual closing, as mentioned, it is necessary to reach a compromise on the sale price, and here it is advisable to turn to specialized companies (the so-called advisors), if you do not have direct experience in the field. Then we proceed to draft the agreement between the parties and then to define the actual purchase contract. Clearly this is a very delicate phase, due to the possibility of inserting different clauses, depending on the operation. We repeat that, before reaching this step, a preliminary consultation is always carried out a very thorough due diligence. Therefore, a series of aspects relating to the financial health of the company that is the object of the possible acquisition are investigated. There are different types of due diligence, from legal to accounting, up to strategic and fiscal analyses. Finally, it is also appropriate to talk about what happens after the survey, or the post-acquisition phase, which consists of a further study of the accounting aspects, to analyze any discrepancies.