While deciding to acquire a business can be an extremely exciting time, it’s important to focus on more than just the cost.
A lot goes into your acquisition deal, including business contracts, debts, and (some would argue most importantly) return on investment.
Business Contracts
After being in business for a while, a company can accumulate quite a few different agreements and binding contracts. Not only can these contracts confine how you can conduct the business, but might even restrict suppliers, product uses, and more.
Debts
Even though every business being sold is not doing so because they have too much debt, it is something that can contribute. With an acquisition, it’s crucial that you understand all the debts a business has before merging so that there are no surprises. Ideally, if the business you are purchasing does have a form of debt that needs to be paid off, it can generate the amount of money necessary to cover it on its own (this may take some ingenuity and restructuring in order to work).
Return on Investment
To make an acquisition worth it, the merged business needs to be able to return an initial investment. Don’t just look surface-level or believe the last few months of profits from the business – instead, do a full audit to see what’s really going on from an inside look. Make realistic projections and dive deep into a market analysis to determine whether the business will still be relevant in five years (we all know how fast things can become obsolete).
One thing you shouldn’t have to worry about in terms of acquisition is funding. Get in touch with the Advisory Capital Funding Group today!