From the start, it\\\'s best to know why you\\\'re planning to buy another business, says Peralta. A good number of reasons like geographical spread or entering a new territory are all valid, he says. However, some questions must be answered to make accurate projections of the benefits you could achieve by doing so.
Peralta\\\'s advice is to have a three point strategy for evaluating the business for sale: "First it has to fit your business model. Second, it must have a good pool of clients, more blue chips, the better. And third, ask yourself, \\\'is the management team high quality?\\\'"
MAKE A STEADY INTEGRATION
If you do resolve to push through with the acquisition, Peralta says integration of people arguably represents the biggest hurdle. Entrepreneurs must set aside time to complete the integration post-purchase.
"Never underestimate the cultural differences between businesses. Some of the remaining staff from the previous administration could prove resistant to change. You should get to know who your trusted people are, and who are the ones you need to let go," continues Peralta.
Be firm but direct with your new team, because dilly dallying wastes precious time and resources during transition.
Before you make the purchase, be realistic about synergies with your old business and the business you are trying to acquire. Businessmen often overestimate the cross selling opportunities between two related business, with some dire consequences, Peralta cautions.
"The idea that an acquisition equals growth can be an illusion. Remember, you\\\'re a bigger business, but you\\\'ve also taken on more risks. The ultimate measure is whether you can enhance your profitability, and the results come sooner than you expect," says Peralta.
Companies must keep their focus on customer service and quality above all else. Acquisitions can go wrong when it forces you to veer from the right course.
At the end of the day, you get what you pay for. Pay attention to every detail that impacts your bottom line and operations in relation to the new business. "If you\\\'re not well prepared, you could end up losing a lot of money and goodwill. Remember, goodwill can never be bought," Peralta ends.