\u200b<\/strong>Entering a new market can multiply your growth rate and increase your business value. You can enter a new market by building your business internally, partnering with a company in the desired market, or buying a business that operates in the target market. Should you build, partner, or buy?<\/em> Determining how much time you have, how much each option would cost, and how much risk you\u2019re willing to tolerate can help you decide. If it is faster, cheaper, and less risky to acquire, that may be the best option for you. But if it is faster, cheaper, and less risky to build internally or partner, it may be smarter to pursue organic growth. <\/p>\n\n\n\n
Is the price right? When determining a favorable price for acquisition success, it\u2019s wise to negotiate with a seller who is motivated to sell (and walk away from sellers who are on the fence). Some business owners compelled to sell have complications in their life that increase their need to sell, such as the following:<\/p>\n\n\n\n In my experience, many successful acquisitions begin with asking the right questions. These 5 questions will help you best position your company for a profitable acquisition.<\/p>\n\n\n\n #1:\u00a0Do you have superior information?<\/strong>\u00a0For example, you might be able to access customers that the target firm cannot reach.\u00a0<\/p>\n\n\n #2:\u00a0Are you the only bidder?<\/strong>\u00a0Owners that operate their companies as lifestyle businesses often have difficulty attracting buyers. If you are the only bidder, you can more easily dictate the price and terms.<\/p>\n\n\n\n #3:\u00a0Is this a recession?<\/strong>\u00a0Recessions are fantastic for well-run companies, but challenging times for poorly-run businesses. During a recession, some businesses get in trouble and need a lifeline to stay in business which makes them ideal acquisition targets.<\/p>\n\n\n\n #4:\u00a0Is the business \u201csick\u201d?<\/strong>\u00a0If you are bargain hunting, underperforming business can be more attractive than well performing ones. You can buy a \u201csick\u201d company for a low price, enter the new market, cure the \u201cillness\u201d, and thrive!<\/p>\n\n\n\n #5:\u00a0Does the seller care solely about price?<\/strong>\u00a0Many founders see their business as more than financial vehicles. They care deeply about their customers, employees, and legacy and want them to be well cared for post-acquisition. An idealistic founder is often favorable for an acquisition, but a mercenary founder focused only on money will likely demand a steep price.<\/p>\n<\/div><\/div>\n\n\n\n\n People power If you plan to transition ownership of your business one day, you likely hope to maximize the value of your business at the time of transition. Many tools can increase the value of a company, but one of the most effective methods is acquisitions. Here\u2019s what you need to know about this strategic growth opportunity. …<\/p>\n","protected":false},"author":2,"featured_media":2673,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_wp_convertkit_post_meta":{"form":"-1","landing_page":"","tag":"0","restrict_content":"0"},"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[15,16],"tags":[],"mai_display":[],"class_list":["type-post","category-value-building","category-cfo-advisory","entry"],"yoast_head":"\n
\u200b<\/strong>Unfortunately, many acquirers are inexperienced in doing deals and overpay when making acquisitions. They often focus entirely on the math, such as a multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA) or revenue. These numbers are important, but determining the right price is much more complex than using a single method or metric.<\/p>\n\n\n\n\n
The Wealthpreneur<\/em> Lesson<\/h2>\n\n\n\n
Ask Before You Acquire<\/strong><\/h3>\n\n\n\n
![\"\"](\"https:\/\/i0.wp.com\/jdtadvisory.com\/staging\/4959\/wp-content\/uploads\/2024\/07\/9cMefC21VGEgun4ixGuQCE.png?resize=800%2C475&ssl=1\")
<\/figure>\n<\/div>\n\n\n
\u200b<\/strong>Having an operating team that is superior to the target company’s team protects your downside and captures more upside. If the employees of the acquired business quit, your team can pick up where they left off. Additionally, your company\u2019s team will improve their operations, deliver more growth and better profits. Ideally, your team would be at least twice as skilled as the target company\u2019s employees.<\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"