Guide to Acquiring a Business
Identifying Potential Acquisition Targets
Careful and detailed research is required to identify potential target companies which meet your agreed acquisition profile. It is important to perform this task with an open mind and to set aside pre-conceived ideas and opinions about companies which are already familiar to you or which are only known to you indirectly.
Examples of steps that can be taken to identify and evaluate potential acquisition candidates include the following:
Consider employing a specialist firm of corporate finance advisers to carry out an industry search to identify companies which meet your agreed acquisition profile. They are experienced in carrying out this role and can bring additional objectivity to the search and evaluation process.
Use trade shows and exhibitions, industry associations, trade directories, independent industry research, trade publications and internet search engines to identify and prepare a 'long-list' of potential acquisition candidates.
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Using additional research - e.g. Companies House returns and filed accounts, market knowledge of senior management team and other industry contacts - eliminate some constituents of the long-list to end up with an agreed short-list of potential acquisition candidates.
Key factors in arriving at this final short-list will be your assessment of the likely availability of the company in question. What is the shareholder base? Are there venture capital shareholders who will require an exit within the medium-term? Are the owner-managers close to retirement age? Are the future prospects for the business favourable?