One way of growing your business is through acquisition. By buying another company, you can increase your reach in terms of getting more customers or selling more products, especially if the company you bought has a good reputation within your market space.
But aside from being a pricey affair, acquisitions do come with some pitfalls. Fleshing out these small details and incorporating them into a fluid strategy may mean the difference between a failed or successful buy.
To help entrepreneurs sort through some of the issues about buying a business, we talked to Richard Peralta, a management consultant that specializes in Mergers and Acquisitions for a foreign risk management firm. He provided a rundown of some of the key elements you should consider before buying a company.
IS THE TIMING RIGHT?
Timing means a lot in business, and the same can be said for deciding to grow your business through acquisition. Peralta counsels checking with your bank about interest rates (if you\\\'re planning to use leverage to finance the deal), check your books to determine if you have enough, and see if your personnel are ready to integrate with a new team.
"First, you have to look within your company to see if you\\\'re ready. It might make little sense to buy another company if your core business will suffer because of it. Remember, don\\\'t buy just for the sake of buying or fear of losing out on a good deal. If your internal checks turn up on the negative side, maybe it\\\'s not the right time for you to grow this way," he explains.
Timing also factors in seeking out why the other business is for sale in the first place. If it\\\'s a competing business, it\\\'s easier for you to find out why the business owner is bent on selling it. Peralta says doing your due diligence involves talking to their suppliers, customers, and even their staff.