FAQ’s – Buying a Business-Business Acquisitions and Mergers

Frequently Asked Questions and Answers

• Can I use acquisition to increase my business revenue

The single best reason to acquire another business is for the immediate benefit to your bottom line. Consider looking for companies, either direct competitors are business that can assist you through vertical integration which when you eliminate the redundant expenses drop what could be pure profit margin to your bottom line.

Example. Buy a competitor who is scrapping by and has $1,000,000 in revenue. Eliminate the the duplicated expenses and maybe 20% of the revenue drops to your bottom line. Since the owner of the business is not making any money you can pay him some percentage of the profit as a buyout price. Perhaps, even offer him shares and a minority shareholder position in your business.

Many companies go from nothing to hundred million dollar revenue companies using this technique. Of course you need to be very careful but there is no surer way to success since you can quantify the benefits in advance.

• Can I acquire a business without cash?

Yes, you first need to profile what benefits an acquisition will do for you and then structure the deal accordingly. Remember, there are any number of businesses for sale in which the owner wants to retire or is not making any money. These are some of the types of situations where a none cash deal can be made.

• How do I go about selecting a business

Create a profile of what the likely acquisition target will look like. Example: Not profitable, death of principal, location, etc.. Once completed you look for a business that fits the profile

• What are the dangers I need to look out for?

There are too many different areas that you need to be careful. One area we constantly find is custom software ownership. Business owners hire programmers to custom develop software not realizing that copyright ownership rests with the programmer and not them. Unless they have entered into a specific contract with the software developer for ownership of the developed software, US Copyright laws recognize that the developer owns the software code.

• How can I create a acquisition strategy?

We have a an audio seminar that also includes a free tutorial that will help you understand the issues and answer many of your questions.  Once you familiarize yourself with the complexities of acquiring another you will be able to structure a acquisition strategy.

This strategy works with any size business and you don’t need cash to implement it. It is advisable that you hire someone like us to advise you along the way. However, if you cannot afford our services we offer an audio tutorial that will provide you with a list of issues you will need to review and consider within any deal.

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