Thinking of Buying a Company?
Regardless of your level of investment in a business, it’s imperative to educate yourself long before you enter the negotiation process, taking into consideration factors such as levels of sales, costs, profits, etc. Once you have evaluated your research and solidified your decision to move forward, only then can you go ahead and make an offer.
Negotiation typically isn’t a smooth process, so our team at Symmetrical put together a few tips to help you prepare.
Research the Market
Industries differ and so do methods of valuation. Research the marketplace, looking specifically at industry publications. Pay close attention to the industry’s customer base and competitors, as well as product and service demand. This insight can help you reduce business risks, spot current and upcoming issues within your industry, and identify growth opportunities.
Establish Transition Expectations
In most cases, owners want to maximize their total valuation; however, maximizing purchase price is not always a seller’s top priority – remember that some owners may be more focused on selling their business to a “capable buyer” or someone who will continue their legacy. When it comes to discussing the future of the business, create a transition plan that will guarantee a smooth, comprehensive arrangement, while giving you the control you ultimately want.
Ensuring Closing Conditions are Met
Business acquisition agreements generally provide certain requirements before the buyer is obligated to proceed with the closing and before the seller is obligated to sell. Before you sign off on the sale of your new business, make sure that the closing conditions you made during the negotiation process have been met. Typical closing conditions include:
Truth and accuracy of the agreed upon representations and warranties
Obtainment of required consents
Performance of pre-closing covenants
No material adverse change in business – assets or operations
No legal proceeding that would halt the transaction
A successful transaction takes both mental and tactical preparation, so make sure you research the market and establish an idea of what you expect from the deal. Developing such a collaborative and firm position should ensure you receive the value you desire. If you are considering purchasing a new business, understanding the negotiation process is key. Let Symmetrical Investments help guide you – contact us to learn more.