You have recently come across an opportunity to expand your business by buying out another company. While the prospect of achieving a new market advantage against your competitors is highly appealing, you must thoroughly investigate the business you are interested in buying out to guarantee that your decision will effectively fuel your organization’s success and not work against the position you have worked so hard to achieve. At Dunlap & Seeger, we have helped many business owners in Minnesota to prepare to make significant strategic decisions including buyouts, joint agreements and acquisitions.
In your efforts to identify whether or not buying out another company is in your best interest, you must first create a clear goal. Ask yourself what you wish to achieve by buying out another business. Look for one that has complementary values and that has competencies where you may be lacking. According to Entrepreneur, here are some helpful considerations to make before you commit to anything:
- Create a “letter of intent” that clearly lays out the terms and conditions of your contract.
- Take the time to introduce yourself to employees of the business you may buy out. Tell them about your company and educate them about what role they will be playing.
- Look at the overall health of the company’s finances. Understand exactly what you are buying and whether or not you will be assuming responsibility of their taxes or outstanding debts as well.
- If possible, find a seller who is willing to stay close by to allow you access to ask questions as you adjust to the change in dynamics of your company.
When you know what to look for before agreeing to a company buyout, your decision can come with more ease and confidence than it would otherwise. For more information about making business decisions, visit our web page.