What Happens If Your Company Is Being Bought Out?
If your company is being bought out, for whatever reason, there are certain things you can do to prepare your business for the shift and make the acquisition more seamless.
What does it mean if your company is acquired?
If your company is being acquired, it means that another company has purchased it and will have control over the organisation of the company. When this has happened, your company will form part of a single business entity. The company stakeholders will then make business decisions for your company that will assist in helping the larger organization reach its goals.
Why might someone acquire your company?
There are plenty of reasons why a company may choose to acquire another company:
Portfolio growth - companies may use an acquisition in order to grow their portfolio. That means they are able to expand their client offerings and offer more products and services. This not only allows them to diversify their products, but also allows them access to a new target market.
Increased earnings potential - acquiring another company can realise more earnings which brings the company more money to grow and increases the value of the company, making them more attractive to investors.
Bigger market share - if a company chooses to buy one of its competitor companies, it means there is less competition in the market. Rather than compete for the same clients, they can work together and realise a greater market share with all products and services coming under one company name.
For tax liabilities - if your company has more tax losses, another company may choose to acquire your business as it will lead to less tax liability.
To acquire an asset - it may be that your company has developed something unique that could benefit other benefits. If that is the case, another company may want to acquire you in order to access what you have developed and help them succeed in their sector.
How can you prepare your company before it is acquired?
“Before acquisition, you can help to make your business better prepared for purchase,” explains Richard Allan of CapitalBean.com
“To do this, you should improve any areas of your business that you know attract buyer interest. As part of due diligence, you should know your valuation range and undergo a third-party assessment.”
“Make sure that your management team is on board with everything that is happening so that they can keep the business running smoothly and performing as normal while the company is undergoing due diligence.”
“Establishing an advisory board and transition team (including an M&A attorney, investment banker and financial advisor) will also help the acquisition go off without a hitch.”
What can I do during negotiations and due diligence?
After an offer has been made on your company, it is important to be discreet, only sharing the details of the sales process with essential parties. This is because until the details are absolutely final, there is still the possibility of the sale falling through. During the process, you should have regular meetings to check in with key stakeholders and make sure that everything is progressing as it should.
What should I do once the company has been bought out?
After the acquisition deal has closed, it is your responsibility to make sure that your employees know what this means for them. You should make the announcement something to celebrate and ensure that communication with your team is clear and consistent. It can be a stressful and anxiety-inducing time for team members as it creates a sense of instability. Make sure to check in with them and focus on the positives that will come out of the acquisition.