Apr 3, 2018

So. You own a good business. You manage it well and it’s growing organically. Congratulations! But what’s next?

Assuming you want to grow your business to another level – even with all the current political and economic uncertainty surrounding Brexit – now is a good time to think about acquiring a competitor or making a strategic acquisition.

Paul Edwards, Partner at Afford Bond Chartered Accountants said: “One of the first steps you need to take is to ensure you have funding in place. The second is to ensure your management team fully understands your strategic plan. This naturally includes solid accounting advice required to handle an acquisition. This might mean examining your capital structure and the debt/equity ratio in your business to be certain that you have enough liquidity needed to journey through a successful acquisition. And acquisitions always take longer than you expect!”

You will need to consider your competitive position and future objectives so that you are clear about what the acquisition is to achieve. For example, are you intending to:

– increase market share

– add new products

– enter new markets

– take advantage of economies of scale

– or eliminate one of your competitors

Once you’ve confirmed the above, you can identify a target. Post-acquisition integration will be vital and consideration must be given to who will be responsible for which elements. There may be key staff in your acquisition company who you would wish to keep. Or can you see better revenue and cost models which would work better than your existing ones, in the new larger organisation?

Further on in the process, you will need to agree Heads of Terms, followed by Due Diligence.

To grow your business, it’s essential to consult experienced business advisors at this stage, especially if this is the first time you have undertaken an acquisition. There are lots of pitfalls which can be avoided with expert accountancy advice. Your advisors are also usually best placed to give you an independent view of the target.

At Afford Bond, we would always recommend that you assemble a ‘transition team’ to plan for the integration of your target business. This team should consider operations, processes, and the culture of the two businesses. And last but not least, it is essential to communicate a clear message to the employees of both businesses and to set milestone and key objectives to monitor progress.

“It’s a tremendous marketing opportunity as well,” said Paul Edwards. “Acquiring another business can be a lot of hard work, but the benefits can be fantastic. And the difference between something good and something great, is the attention to detail.”

For an informal chat about growing your business, please email or complete the Contact Us form here on our website. Afford Bond Chartered Accountants have offices in Nantwich, Wilmslow and Chester – our key competences are business growth, accounts, audit, taxation, payroll and corporate finance and we see constant overlap in the delivery of these services demonstrating the need for qualified and experienced advisors.

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