What should I do when buying or selling a business?
Of course, buying a business is a big deal, and you can advantageously seek legal assistance, so you do not end up with the cat in the sack. You typically ensure this with Due Diligence, which can almost be translated to an inspection with timely care. It covers a thorough review of the company and its obligations and risks. Here you will map out any pitfalls, such as obligations to customers and suppliers or concerns regarding employment contracts and rental contracts.
All in all, it is a good idea to have such a 360-degree overview of the company before you buy. It will typically be a lawyer and an accountant who perform the task.
If you sell your business, the price may be what you care about the most. To achieve the highest possible price, you should look at the company’s maturation, and here we can help you. Our specialists know where you should invest so that your company becomes more attractive to potential buyers.
We can also advise you concerning tax optimization in the event of a sale. In addition, we can help you prepare confidentiality statements in those situations where sensitive information needs to be disclosed to potential buyers. Of course, we can also prepare the final sales contract to cover both you and the buyer adequately.
It would help if you considered this when acquiring a business
Buying and selling a business can bring many benefits — more customers, fewer competitors, and the opportunity to trim the organization, etc. However, a successful acquisition also requires thorough prior considerations. According to our experts, here is an overview of five of the most critical considerations you should make during the process.
1: Why should I buy?
What do you want to achieve with an acquisition? Is it growth, better earnings, rationalization, better hedging, positioning in the market, expanding the range of services/products or something else?
Are the competencies to complete a purchase present in your business? Can you handle the task internally?
Do you have the right advisors, and what does your bank say? Does your company have the proper company structure to incorporate an impending acquisition?
2: Which companies should I buy and how?
Analyse the companies that fit your purchasing criteria—sort by size, turnover, geography, customer portfolio, services/products, or others.
Consider which purchase model best suits your situation. Should it be cash, “earn-out”, or share for a share?
Talk to your bank again and get potential financing options examined and clarify how and whether the bank will require security for its possible financing. Will it, for example, need a corporate mortgage, personal guarantees, etc.?
3: What are we negotiating about?
Once you have done your research, you are ready to negotiate the price. Consider what should and should not be included in the deal – e.g. customers, employees, clauses, cooperation agreements, rights to patents and trademarks, guarantees or others. Also, consider how to secure the necessary knowledge from crucial employees and IT systems.
Remember statements of confidentiality for anyone who are directly involved in the purchase discussions and of significance for the implementation of the transaction.
4: What did we agree on?
Documentation, documentation, and documentation. It sounds awkward, and it is. But the investment is well spent, because often it will subsequently save you a lot of resources otherwise needed to discuss the agreed terms again and interpret on an agreement that is to loose.
Get everything agreed upon written into the final purchase contracts.
Clarify the future company structure in the company and agree on how management and the board of directors will be organized in the future.
5: How do we get the best out of the deal?
Prepare new business plans and lay out a strategy for the company’s continued operation.
The company must usually be reorganized and optimized with staff, IT, buildings, suppliers, and collaboration agreements, etc. Be aware that there are almost always different corporate cultures that need to be merged.