I was at a conference the other day on the topic of mergers and acquisitions.
There were all of the usual questions...
How much is my business worth?
How do I increase my valuation?
How do I add multiples?
What kind of terms should I expect?
All sorts of questions.
But sometimes if you’re not asking the right questions.
You won’t get the right answers.
Here are 3 reasons to buy or sell your business.
These reasons are in no particular order.
Both the buyer and the seller should be comfortable with the price.
Both parties need to feel good about the dollars exchanged.
On the buyer side you’ll want to you want to make sure that your paying a fair price for the upside that you stand to gain.
On the seller side of the deal parameters you’ll want to make sure there is enough money on the table to make it worth your while.
Price is obvious.
But it’s usually the main reason.
The second reason is people.
On the buyer side you’re looking for someone to come in as part of an acquisition or merger that compliments you.
People that you can work with.
People that you can grow with.
On the seller side you’re looking for the same.
If you’re looking at exiting your business you’ll still want to make sure your customers are in good hands.
People can be a big factor and doing a deal.
Or walking away from a deal.
Process is a key component when doing to diligence.
Companies that operate in a like manner are more likely to be successful then trying to mix 2 dissimilar businesses.
While it’s interesting at times to acquire a business that doesn’t do quite the same thing that you do.
You’ll need to consider the fact that the expertise and process in that business will not be similar to yours.
And could cause all sorts of integration problems.
As well as other problems down the road.
A company with good service delivery process is wonderful thing.
A company with well documented process and procedure is even better.
People, process, price.
If you can figure these 3 things out when working on a merger or acquisition.
You will be spitting distance from making something good happen