If this is your first venture into an acquisition, you are entering a minefield, but the rewards can be significant, financially and personally. But you might not survive unscathed!

So, what do you need to know? You don’t need encyclopaedic knowledge. You just need to know enough. What is enough? Well, in all probability it’s what you know right now.

You don’t need a degree in business administration. You can hire external professionals to take care of the numbers as well as the all-important tax details and legalities for you, and also to give you business advice. You can also hire staff to do all the stuff needing to be done in that business, if they are not acquired with the purchase. But you do need the courage to leap into the dark.

The real question is, how can you buy the businesses without using and risking any of your own money?.

Buying a business means that you avoid the stress of the set up and taking it through high risk early development. You also don’t take the financial risk of setting up a new business when finance can be hard to find and may result in using and risking your own capital. You avoid the endless years of hard work that most business owners endure. You just need to find the way to “buy” this little gem that someone else has brought into the world and nurtured.

So, what does it take to be able to successfully buy a business? What do you need to have inside of you?

1. You must be a people person. People will be happier selling you their “baby” if you are a nice person. In any event, you will need people to help you, and so you need to be able to get along with them. If you’re abrasive or patronising, prospective sellers won’t want to deal with you, and help will be harder to find.
2. People must see you as an honest operator. You need to be able to ensure that both sides get what they want from the transaction, or at least as best you can.
3. You will need to work hard and focus on the matter in hand. Grafters get on!
4. You need to treat people with respect, especially if you want to negotiate with them. You need to establish your credibility as an investor, and that means acting in a professional manner and respecting the other party for who they are and what they have achieved to date.

They may be selling their “baby”, which they have seen born and grow over any number of years, and there will be many mixed emotions in their heads. They will want to know that you are going to nurture it and take it forward, and not just asset strip it.

The seller will need to believe that the sale is a positive step after what they have done for that business to date. They need to believe that they have done a great job up to now. There may be external factors that have forced them to sell. They need to feel that, despite their great efforts, it is just some external factor that has forced their hand now.

5. Be decisive. Opportunities can come without warning and will disappear just as quickly. You need to grab the good ones and discard the bad ones. Spending time trying to make a bad deal work prevents you seeing the good deals when they come along. When people decide to sell a business, they want to move fast, so you need to act quickly. Be ready! Be decisive during the purchase process. Don’t let the seller suffer from seller’s fatigue. Keep the ball rolling and the seller engaged. Otherwise, the opportunity, and all the hard work to date, may just disappear in a puff of smoke. Somebody else will get the benefit.
6. You need to have a sense of responsibility if you are taking over existing staff. People’s livelihoods are at stake. These are real people with real life commitments. You may need to let some of them go, but you must do this with sympathy and respect. Nevertheless, if you need to do it, get it done, do it quickly, professionally and without fuss.
7. You must be a delegator. Unless it is a very small business, you have to understand that you cannot do everything yourself, and if you try, you will not do it as well as someone who has the time to do it properly. Remember this is delegation and not abdication. You are still ultimately responsible, and that is something you cannot delegate.

But not everyone has all of these when they first start out!

Alan E Long

The Long Partnership

07770 738770