Taking over a business: tips for successfully taking over a business


Taking over a business: tips for successfully taking over a business

Home " Buying a business " Taking over a business: tips for successfully taking over a business

Taking over a business is complex and time-consuming. There are several concerns that you don't face on a daily basis. Time for business acquisition advice! We offer 11 tips you can put to good use when taking over a business. Do you need help with one or more steps? Then contact us for a no-obligation intake

In this article we take a closer look at the various aspects involved in a business acquisition. In the form of 11 tips, we name the most important factors to consider.

Business acquisition advice: 11 tips

Taking over a business is not a simple matter. You put a lot of money, time and effort into it. So it is important that the entire acquisition process runs optimally.

Business acquisition advice can do much to clarify and provide the needed assurance. The latter is especially true if you have an attorney looking in on your acquisition. The eleven tips below are a good starting point when taking over a business.

  1. Buy a brand
  2. Perform an independent financial scan
  3. Explore the future of the business
  4. Take extra care when acquiring from friends or family
  5. Delineate through a search profile
  6. Build a good relationship with owner and employees
  7. Don't make a deal without a non-compete clause
  8. Put everything on paper
  9. Provide a quick handover period
  10. Engage the right specialists
  11. Outsource the negotiation

Tip 1: Buy a brand

Some businesses are successful only because the owner has made a good name for himself. The customers are all contacts of the founder and only purchase products because they have so much confidence in the owner.

This is a risk in a business acquisition. After all, the owner is leaving. There is then a chance that his customers will leave with him. Therefore, if you are taking over a business, it is important that it be a stand-alone brand, so that customers come to the business' name and not the owner's name. An acquisition lawyer can play an independent role in this assessment. 

Tip 2: Perform an independent financial scan

If you have found a suitable company, have your own financial research done as soon as possible. You cannot possibly rely on the figures you receive from the owner.

They may well be correct, but the seller obviously has every interest in presenting things just a little bit better than they are. Have your own accountant do a book review so you know exactly how the business is doing.

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Tip 3: Examine the future of the business

A company may have been very successful in the past, but times change. Products that sold like hotcakes a few years ago may now be completely obsolete.

Of course, the numbers from past years give a good indication, but it is also important to consider what the future holds. For example, is there a solid strategic plan? Have expectations been set for the coming years? How is the customer base developing?

These are all things to research before you decide to take over a business.

Tip 4: Be extra careful when acquiring from friends or family

It seems ideal to take over a business from friends or family, but caution should be exercised precisely because there is a personal side to the acquisition in addition to a business.

Possibly the family from whom you want to take over the business has a particular view of how the business should be continued, they have expectations about how much time and money you will put into it, and they are not waiting for major changes in direction.

If you plan to do things differently, you may encounter resistance.

Communication is the key word here. You may think you know everything about each other and the company, but to keep the relationship good, it is extra important to express all expectations, doubts and plans.

Tip 5: Delineate through a search profile

If you are looking to take over an existing business, you may find that you can't see the forest for the trees. What kind of business are you looking for, how big and in what industry? Set as specific a search profile as possible to avoid getting lost in the supply and then end up not knowing what you want at all.

Draw up a plan, indicating as accurately as possible the industry you are looking for something in and the region. Describe the life stage of the business and its size.

Also consider what products and services you like to offer. This will make your search for the right company much easier. The lawyers at business acquisition assistance also have a large network that you can make use of. Feel free to contact them for the possibilities. 

Tip 6: Build a good relationship with owner and employees

Be sure to build a good relationship with the owner and employees. After all, the owner is selling a bit of his baby. He is attached to his business and would like it to be taken over by someone he likes and trusts.

Be careful about telling people about new plans you want to implement. Implicitly, this can be taken as criticism of the owner.

Also, make sure you can get along well with the company's employees. They will watch you with suspicion. They were probably happy with the old owner who they have usually known for many years.

You are new and need to find your niche first. Be humble and listen to employees' advice so that they will be willing to work for you afterward. You will need them badly.

Tip 7: Don't make a deal without a non-compete clause

On the one hand, you need to build a good relationship with the owner, and on the other hand, you need to be tough on business: a purchase contract without a non-compete clause, for example, is not an option.

In a non-compete agreement, the seller agrees not to be active with the competitor for a certain period of time.

The term is often three years and it involves both direct and indirect competition. Thus, the selling party may also not be the financier of a competing business or, for example, work as a self-employed person in a child's business.

The seller has quite a bit to gain from keeping the non-compete clause out of the purchase contract. So pay close attention to that and do not sign if this clause is not included. Do you have or foresee problems with this? Then it is advisable to hire a business acquisition lawyer for advice. 

Tip 8: Put everything on paper

No matter how cozy the contact with the owner is, you are entering into a business agreement with major financial implications. Therefore, make sure everything is well written down and plan accordingly: when must the bookkeeping review be completed? What will be in the letter of intent? And when will the final signature be made?

If you have a global plan for this, you prevent the process from getting bogged down in endless discussions about details. Moreover, it is always nice if you can refer to documents in which everything is written in black and white.

Tip 9: Ensure a quick handover period.

It is common for the seller to remain active within the company for some time after the acquisition. You would like to learn as much as possible from him, get to know his network and walk with him through the business processes.

Also, the other employees can get used to you well if you do so in consultation with the old owner.

But on the other hand, you also want to change things and do things your own way. The old owner may not agree and may become obstructive.

Therefore, a takeover period is important, but it should not be too long. After no more than six months, it is better to part ways and move on by yourself.

Tip 10: Engage the right specialists

You cannot actually do a business acquisition alone. There are so many different financial, legal, strategic and personal aspects to an acquisition that it is virtually necessary to call in specialists.

Consider your own accountant, a lawyer who will draft the contracts and work with any acquisition consultant to determine the right strategy.

Bedrijfsovernamehulp.nl is the specialist of choice in this area, able to help and guide you through all these matters. We are specialized lawyers with a proven track record in business acquisitions.

Tip 11: Outsource the negotiation

There are several reasons why it is best to outsource sales price negotiations.

First, because you may have little experience with it. A specialist will know better what is the right strategy to arrive at the best deal.

Second, negotiations can be time-consuming. There are all sorts of details that come up, causing you to spend times negotiating when you are already busy enough.

Finally, negotiations can be tough. After all, the owner wants the best price for his business, while you want to pay as little as possible for it. At the same time, it is important that the relationship remains good.

To avoid clashes, it is best to have an expert handle the negotiations. Business acquisition lawyers know the ropes. 

Taking over a business: advice

With the above tips, you will at least know what to look out for when going into a business acquisition. For example, when taking over a business, it is important to make sure that you buy a brand, that you put everything on paper properly and that you call in the right specialists in time, who can give you takeover advice.

Bedrijfsovernamehulp.nl has those specialists in house and can assist you in multiple areas of business acquisition. Contact us now with no obligation for a personal consultation.

take over company tips
How does a business acquisition work?

A business acquisition is a lengthy process for which sufficient time should be taken. Once you have found a company you want to take over, you will receive outline information about the company from the selling party. This is also called a "teaser"; often no more than one A4 sheet with the company's most important key information.

If you are interested, you will then sign a confidentiality agreement, after which you will receive an information memorandum with more extensive information about the company. If the information memorandum gives you reason to proceed further in the process, the first exploratory talks follow and you try to determine the value of the company. Then you sign the letter of intent, which outlines the sales agreements.

Next, you have a due diligence or bookkeeping investigation carried out to check whether the figures provided are correct.
Once the financing options have been weighed up and the financing is available, it is time for the negotiation phase to finally reach a deal that both buyer and seller can agree to.

Should I use an acquisition advisor?

Nothing is compulsory, but it is convenient. Buying a smartphone is something you do yourself, but buying or selling a house quickly requires the help of a real estate agent and mortgage broker to get the best deal and financing.

Buying a business is many times more complex than buying a house. A business acquisition is usually not something you deal with on a daily basis. Therefore you can easily overlook important aspects.

An acquisition advisor can help you make a plan, make sure you have the optimal strategy and negotiate the best deal for you. So yes, an acquisition advisor can be of great service to you.

Why is a non-compete agreement important?

You should never sign a purchase contract without a non-compete clause. The owner obviously has a large network. If you take over the company, you obviously do not want him to run off with the most important customers, something he is actually allowed to do if you have not included a non-compete clause in the contract.

Usually such a clause is valid for three years. The owner may not do competing business, either directly or indirectly, during that period. For example, he may not finance a direct competitor or become a consultant to a competing company.

Why should I take extra care when taking over family?

Taking over a family business has many advantages. You already know how things work, you can trust the figures presented, you may even already know the employees, and you are familiar with the network. But there are also disadvantages, precisely because there is a personal side to the takeover, even though it is ultimately a business deal.

You may want to do things differently, while the family member whose business you are taking over may think differently. There may also be a conflict about the price or course of the business. Of course, you want to keep the family ties good. Therefore, caution is advised.

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