The Common Pitfalls in Business Acquisitions: What Potential Buyers Should Avoid

There are a number of reasons why potential buyers back out of a purchase or acquire the wrong business. The decision to buy a business on its own is a great accomplishment that also represents a milestone in their professional and personal life. However, the process to buy a business is mixed with complexities ranging from legal issues to managing people to name a few. With the right approach, these issues can be dealt with and be a rewarding experience if the business chosen is researched thoroughly.

Key Reasons Buyers Struggle or Make Mistakes:

• First-time: Many business buyers are first-time buyers navigating through the purchase process, often finding themselves overwhelmed and ill-equipped to grasp the process.
• Overvaluation: It is common for businesses in sale are excessively priced and overvalued.
• Lack of Experience: A challenge is that the majority of them have minimal experience or lack the experience required to purchase the business which may not align with their interests.
• Inadequate Due Diligence: Failing to conduct thorough due diligence. A business may appear to be successful, yearly financial results may show profitability YoY but internally harbor hidden problems.
• Unclear Motivations: Sometimes a business is up for sale without clear reasons and the type of environment the business will be after taking over is left to be ambiguous.
• Misguided Enthusiasm: The emotions of buyers with a business can cost them heavily with buying a business from perceiving an outlook of the business. This can lead to ill-advised decisions based on their impressions rather than facts.

Take-away:

These issues may trouble them and request us to represent them when acquiring such businesses to ensure that they do not land on a field of surprises with their decision. Contact us to understand more and how we can help you buy a business.