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Identifying acquisition targets

Once you have decided to acquire a business, speak to your Accountant, Solicitor or Business Adviser or select a licenced business broker with the capability and experience to conduct a professional, pro-active and targeted Business Acquisition campaign.

Use the broker’s business acquisition reputation and business network to gain leverage from their contacts to target the right investors and industry partners.

To identify and screen potentially suitable acquisition targets, the business search campaign can include the following:

  • Formulation of an acquisitions strategy
  • Formal search scope – discuss the reasons for wanting to purchase a business; what you are seeking to gain from the business and the ideal business
  • Establish Buying Range – assists in arriving at a range of acquisition valuations
  • Discuss the funding options that can be applied to a business acquisition. The aim is to identify an investment range that meets your requirements and will also attract commercial funding support
  • Market analysis to develop a list of acquisition targets
  • Information gathering regarding target availability, financial and operating data
  • Assisting in conducting negotiations with the targets
  • Finalising the transaction between the vendor, the purchaser and their legal representatives

The broker's fee is typically 5 percent to 10 percent of the purchase price, either paid by the buyer or the seller. In some search firms the company acquisition fee is paid on a success basis only.

Tips

  • Many businesses are never advertised for sale. They are transacted off market via business brokers, accountants or consultants to previously identified purchasers. Widen your search via your Broker’s network of accountants, solicitors and consultants.
  • Use a Licenced Broker - buyers should have a skilled third party negotiator working on their behalf. This provides breathing space and think time during the negotiation process. It also preserves your anonymity during the general search phase.
  • Keep your identity confidential until the appropriate point of the transaction.
  • A confidentiality agreement is usually recommended to protect confidential and market sensitive information

Resources

Recommended

Use a Licenced Broker - buyers should have a skilled third party negotiator working on their behalf. This provides breathing space and think time during the negotiation process. It also preserves your anonymity during the general search phase.