Are you thinking it is about time to acquire another person’s company so you can move on to bigger and better things? If so, continue reading…
For those without the experience of having purchased a business, finding out the best way to go about it is not for the faint of heart. But that’s why I’ve decide to share the following invaluable information with you so you can decrease your time learning about the process and get right down to acting on getting a new company added to your portfolio.
What Should the Initial Steps Entail?
First things first, your initial steps towards acquisition will involve you entering into various initial agreements with the seller of the company. For instance, probably you will be required to sign a confidentiality agreement, at the seller’s request, whereby you will agree to ensure that all information concerning the target company is kept private or confidential.
Moreover, it is possible to find that the major terms of the agreement are displayed in a non binding document, for example, the Letter of Intent or Heads of Agreement. So it is advisable to get advice from your legal advisers and also professional business transfer agents so that they can help you with any legal negotiations and detailed financials involved.
The Due Diligence Review
Your team of professional business advisers will take on a further step of the due diligence after the heads of terms have been signed by both parties. A meticulous and effective due diligence review provides excellent foundations for final negotiations. When you strengthen your stand as a buyer, it will help both you and your legal advisers to work together with the company seller to close the deal positively for you and your new company.
The Share Purchase Agreement
A share purchase agreement (which can also be referred to as a business purchase agreement) is the main contractual document which outlines the acquisition terms. The sales agreement may include warranties, indemnities and completion agreements and also information about the due payment date of the consideration and any restrictions that are binding both parties.
Signing the Contract
Signing of the contract and the acquisition completion might be done on the same day. However, it might take some time to give time for the fulfillment of different requirements and conditions, for instance, notifying regulatory authorities and staff members. Before the signing of the share purchase agreement, the buyer and the seller’s board of directors should hold talks so as to pass the terms of acquisition.
It is advisable to stay focused after the deal is completed in order to move your company forward. Complications might appear after completion of the deal, including contractual obligations and staff problems, so it is important to ensure that such issues are taken care of effectively and quickly to ensure the company is running smoothly and successfully from the start.
So there you have the it. The abbreviated nuts and bolts to acquiring a company. What do you think? If you have any questions, please let me know in the comments section.