Business Acquisitions - Why are you buying a business?

Below we have discussed some of the common reasons why people look to acquire a business and what items are useful to take into consideration when making your decision.

Looking to add to your current business structure?

You may already have an established business and are looking to generate a new revenue stream or expand your current operations. Having an established business allows you to apply your skills and knowledge to increase the profitability of the business you are acquiring.

When acquiring a business to add to your current business structure, some items to consider include:

• What kind of efficiencies / costs and management will be achieved?
• Do you have a similar management style to the current owners?
• What impact will the purchase make on the business you are acquiring?
• Is the business a cultural fit?

Looking to acquire a business as a passive investment?

Acquiring a business as a passive investment allows you to focus on growing the business instead of getting wrapped up in the daily operations of running a business.

Fundamentally, you are buying a business with an established management team with the view to analyse and identify what areas of the business require fine tuning.

Given that you would be relying on a management team, some of the aspects you may consider include:

• Is there a strong management team in place?
• Does management operate the business efficiently and effectively?
• Are there processes in place to ensure financial and management reports are received by the owners?

Looking to be your own boss?

Are you looking to buy a business in the industry that you currently work in? This allows you to have control over the work that you do, but also be the person who benefits from the growth and profits of the business.

Practically, you should be looking to buy a business with the intention to earn beyond what you were as an employee and ensure the business is an asset you can sell in the future. After all, you are taking on the risk of owning your own business.

Do you need help with analysing the business you are considering acquiring? BLG Business Advisers have assisted many clients in this situation. Talk with us to gain some direction and determine if we are the right fit for you.

*This information is relevant at the time of publishing and is subject to change*