So your company is about to be acquired, what should you ask for?
Mergers and acquisitions are prevalent in the business world. The selling of a business or company is a decision that comes with careful consideration and planning.
The main benefit that comes with the sale of your company is liquidity; a huge amount of cash might be tied to a company and its operations. Oftentimes, advantageous economic tendencies peculiar to your business’ industry may generate increased demand for your business purchase.
To Whom Should You Sell
Deciding how and to whom to sell your business is crucial, and as a business owner, it can be quite a tough decision to make. Before you decide to give up your company for acquisition, here are some things to look out for and some questions that need to be answered by prospective buyers to ensure that you are not only going just to sell your business but also sell to the right buyer, get the exact amount commensurate with your business value, and also to ensure that there is a smooth transition of ownership.
- What is the reason for an acquisition?
Inquiring about the reason for an acquisition from a potential buyer guides you to deciding on whether to sell or not. It is important that your buyer’s vision aligns with what you desire for your company.
- What is the current situation of any previous acquisition?
For buyers who have had precious acquisitions, a look into the state of affairs might offer an insight into the trajectory that your business might follow if acquired.
- What is the level of involvement in the business afterward??
While some buyers might allow for your involvement in the company list acquisition, some others might not. This is something that should be discussed extensively with a potential buyer before making a decision.
- How do you intend to finance the acquisition and structure the deal?
An acquisition is an expensive pursuit and is highly capital intensive. A serious buyer should offer a suitable payment plan and structure the deal in a manner fair to you as the business owner.
Some other matters that should be established include: retaining of employees after acquisition, questions about the change in the company name, long-term goals for the company, strategies to grow the company after the acquisition.
Asides from asking these questions, you might also want to check the track records of your potential buyer to further aid you in making your decision.
During all of these, it is essential to have a legal team give proper counsel and advice and understand the legal implication of whatever decision is going to be made. This is necessary to ensure proper documentation and prevention of disputes that might occur post-acquisition.