Taking the reins of an existing business through an acquisition is one of the fastest ways to grow your financial practice, but it can be a risky and complicated if not completed with the necessary care.
Not all acquisitions are profitable. In fact, some can end in disaster if the buyer doesn’t complete accurate due diligence and chooses a business with poor growth prospects.
Even if the buyer chooses a business with a lot of potential for growth, the partnership could still be a nightmare if the company culture doesn’t match the buyer’s vision.
If the transition between owners doesn’t occur smoothly, it can unsettle clients and employees, causing them to leave. Then, before you know it, the foundations of a successful company have fallen down and you’ll have to build it up again from scratch.
How to Make the Transition as Seamless as Possible
A lot of your work to ensure a seamless business transition will occur at the front end.
The most important thing is to select a business that is right for your long-term career ambitions.
You’ll want to speak with existing owners about the company culture and their future ambitions for the company. It’s up to you to decide whether these aspects of the business are something you can work with.
You’d be well within your rights as a buyer to install your own direction and corporate culture, but this doesn’t make for a smooth transition and you’re likely to lose a few employees and clients along the way.
Once you’ve decided you like how a company is presented as a potential acquisition to you, it’s up to your legal team to ensure all the information you’ve received is accurate.
There are plenty of stumbling blocks which could pop up during the due diligence process, and it could be made even more complicated if your lawyers tend to make mistakes or overlook details, so don’t skimp when you’re hiring your legal team. Get the most experienced individuals you can afford.
What New Owners Can do to Get up to Speed with the Operations of Their Newly Acquired Business
Most buyers will arrange for the departing owner to remain with their company in some sort of advisory role for at least the first year.
This could be arranged so the former owner becomes your employee on a temporary role, or that they arrange a consulting business that you become a client of.
Either way, they’ll be available for advice on how the company would typically deal with any situations that arise. It’s a fantastic way to ensure continuity following a takeover, and it’s common that this deal is arranged as a condition of the sale.
Using Succession Link makes it easy to browse a huge selection of financial practices to acquire or merge with. With our database of business owners looking to sell, you’ll have an abundance of options to choose from, making it quicker and simple to find the perfect option for your needs. Click the link to learn more about how Succession Link can help you.