Buying a Business
Do you own a business? Are you looking to buy a business? Below are a few simple questions you may like answered.
The simple answer is that you might not want or need to buy another business.
There is always organic growth: increasing your customer base, lowering costs, increasing productivity and leveraging intellectual property to build a brand to differentiate your business from competitors and take a bigger market share. Rome was not built in a day, and the same goes for organic growth for most businesses.
However, buying another business can open doors and exciting new possibilities: diversification into a complementary, or entirely different field for strategic reasons, or perhaps in order to buy a competitor and leapfrog your business into the next league. There is no guaranteed win, but it is something at least worth considering.
Increasingly, in these times of low interest rates and return on capital, you may be looking for a home for your money that outperforms your bank or the markets, or that gives you an asset base or cashflow, or a combination of the two.
Perhaps you just want to be involved in a particular sector, be it viniculture, TV production or precision engineering. Your strategy may be either to invest in part of a business, or to buy it outright.
We are seeing a growing pool of investors looking to diversify their interests: often buying a mature and profitable business where the existing owners are retiring or simply wish to move on.
There may be a competitor that you admire, and already know. This is often the case where you are considering buying a business in your own sector, which you will know very well. Alternatively, there are agents and specialised websites who may be able to assist you with your wishlist.
Once you have identified your target, you might meet with them and negotiate to see if you can come to an accord, and perhaps draft and sign Heads of Terms: a memorandum setting out the bones of the deal, with a binding confidentiality agreement and perhaps a period of exclusivity. You may also need to find the money to finance your acquisition, and to speak to your accountants about the structure of any deal from your own tax perspective and/or that of the vehicle that you are using to make the purchase. At this stage, if not before, you may wish to choose the lawyer who will be able to guide you through the whole process from end to end.
Once Heads of Terms are signed, you will want to perform due diligence on your target, and to ensure that the documentation produced by you and your lawyers protects both you and the business you are buying before and after the proposed transaction.
Battens is one of the oldest law firms in the country. We've never seen a Brexit before, but we have been around to witness the fallout from the French Revolution and were advising clients when the King of England conversed only in German.
If you are considering buying or selling or investing in a business, please contact our team who will be delighted to talk to you or meet with you on a confidential, no obligation basis.
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