ADVANTAGES AND DISADVANTAGES OF BUYING AN EXISTING BUSINESS

The advantages of buying an established business can be achieving scale more quickly, acquiring a capability that your organisation doesn’t have, or it can simply be a route to business ownership (through an MBI or MBO) which fulfils a personal ambition.

But buying a business requires a large up-front investment, a significant amount of due diligence, and careful management of internal and external stakeholders. Additionally, you must also remember that you’ll be paying forward many years' profits, so you need to ensure the purchase will return this investment - and more.

WHO DO WE WORK WITH?

We work with seasoned entrepreneurs and high quality management teams in UK SMEs and small-cap PLCs that have the ambition to achieve scale by acquiring or merging with other businesses. In merger and acquisition transactions we often act as an outsourced Corporate Development team helping our clients meet their strategic growth goals.

See our deals and success stories.

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BUYING A BUSINESS - COMMON PITFALLS TO AVOID

Regardless of route, buying a business is not a trivial endeavour – it’s stressful, time consuming and fraught with risk if approached in the wrong way. A professional and considered approach is critical to ensure you buy the right business at the right price and maintain the value after the deal is done.

Here are some common mistakes that individuals make when trying to buy a business:

• Not taking professional advice;
• Failure to define acquisition criteria that meets strategic goals in advance;
• An overly bullish assessment of targets and defining criteria ‘on the fly’ to justify opportunities;
• Taking an unstructured approach to assessing the market, thus failing to find the most suitable targets;
• Unrealistic valuations resulting in failure to secure targets, or worse still overpaying;
• Inefficient processes resulting in the absorption of significant management time;
• Deficient due diligence resulting the acquisition of unexpected risks;
• Unstructured approach to communications with internal and external stakeholders;
• Lack of post transaction integration plan to best protect acquired value.

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AN ORGANISED APPROACH TO BUYING A BUSINESS

To successfully buy a business, your acquisition strategy needs to achieve these key objectives:

1. Set out your acquisition criteria, thinking carefully about what best drives your own strategy;
2. Take a structured approach to identifying targets that meet those criteria so you can develop a pipeline of potential targets;
3. Develop a professional approach strategy to deliver the conversations you need with potential sellers;
4. Have a clear view on valuation and ensure you are able to offer and justify market pricing;
5. Make sure you have a well-defined process from offer to completion that ensures risks are identified and mitigated;
6. Develop a robust post-acquisition integration plan that protects value.

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BUY-SIDE ADVISORY SERVICES

Our "buy-side" advisory services help you identify the right business targets to build your portfolio, secure the deal, pay the right price, and manage risks. We can also help you secure business financing if you don't have the funds in place to make the purchase. These are the different ways we can help you to buy a business: