For many small businesses, acquiring another company seems like an attractive way to grow. Just find the right target company, then enjoy new customers, trained employees and a proven sales process — all set up and ready to go, right?|
Choosing the perfect business to purchase is only the first step, and subsequent steps can prove just as challenging. An acquisition can be a great way to grow your company, but you have to be committed to making it work. Don’t overlook these five steps:
1. Provide constant communication. Communicate a clear vision for the transition and integration plan. Share as much information as you can at each stage so employees, customers, suppliers and other business partners know how they can be part of it. Don’t wait until everything is finalized or approved to begin communicating. By then, people will have filled in gaps in their knowledge with their own interpretations and anxieties.
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2. Get passwords and rights for digital property. You may have thought about the need to lock up rights to intellectual property, like trademarks and copyrights. But don’t forget about passwords and rights for digital property such as Web domains, social media and email. If a website domain name expires, someone else can — and probably will — snap it up, and may demand an exorbitant price if you want it back. Without rights, you could be locked out of social media, or someone could hijack the accounts. Also, be sure the seller transfers all customer emails to you and sends out a message telling customers you’ve bought the business. Otherwise your future emails to customers could show up as spam.
3. Budget for transition costs. Technology may need to be replaced for the newly integrated company to function with one system. This may involve not only the purchase of equipment and software, but training for employees to get them up to speed on the new system. An acquisition also requires an investment of time to establish and integrate the best of two cultures, operations and processes.
4. Eliminate redundancy without delay. Having duplicate expenses, systems and people can quickly wreak havoc on your bottom line. Once the deal goes through, be prepared to integrate the businesses rapidly.
5. Capture the goodwill the newly acquired company built. Rather than immediately rebranding, which could wipe out some of the value of the company you acquired, consider keeping the old company’s name in some form for a time. If local employees are key to the company’s success, focus on retaining them. You might also consider asking the seller to stay on in some role. Having the seller be your advocate post-sale can help ensure the new company is seen in a positive light.
Rely on our expertise
If you’re looking to make an acquisition, talk to a business banking expert about your options and lending solutions. We’ll get you going in the right direction.