Buying a business is one of the biggest life decisions you’ll ever have to make. The takeover process is a complex process that involves everything from finding the right deal for you, to negotiating the terms and all the details necessary for a smooth transfer of ownership.
At the PRIMA Consulting Group, we make the purchase process as easy as possible. For you:
- We manage the entire acquisition process;
- We estimate the value of the company you want to buy;
- We negotiate the price and terms of the transaction;
- We look for alternative options for financing and structuring the business;
- We conduct the due diligence process;
- We negotiate the terms of the purchase agreement;
- We participate in closing procedures.
What is the purchase process?
The process of buying a business begins with finding a deal that fits your interests and personal life goals, skills, experience, and financial capabilities. This is a step that will take you quite a bit of time, as you will have to go through a lot of sales presentations (teasers) of different companies to find one that suits you.
If you want to obtain additional information about a particular company that has attracted your interest, you will first need to sign a Confidential Information Protection Agreement (NDA). In the next steps, the seller will reveal to you quite a few confidential data, the inappropriate use of which could harm his company. Maintaining confidentiality is therefore very important when selling a business.
Once you have signed the NDA, you will receive additional information about the company and an information memorandum from the seller. An information memorandum is a 20 to 30 page long report that includes details of all major aspects of the business, such as: company overview, industry and competitive environment overview, product/service description, description of marketing strategy, market opportunities, growth and improvement opportunities, overview of employees, key customers and suppliers, business overview, historical financial data and business forecast, past and future fixed capital investments, and the company’s indicative price, and structure of the transaction.
The information memorandum will address the most important questions that may arise for you. Its purpose is to help you decide if you would like to meet with the seller, view the company and request additional information.
This will be followed by a tour of the company and a meeting with the seller, where you will be able to ask additional questions that you may not have an answer to yet.
In the next step, you send an offer or letter of intent to the seller and deposit a security for the seriousness of the offer. If the seller accepts your offer, you can start with a due diligence.
During the due diligence, the seller allows you access to the company so that you can verify that the information presented to you is accurate. The function of due diligence is therefore to assess the risks and benefits of buying a company, based on past, present and future business information. It is divided into business and employee due diligence, financial and legal due diligence. During your due diligence, you will review a number of documents, including financial statements, bank statements, tax returns, lease agreements, supplier and customer contracts, employment contracts, etc.
After the due diligence, final negotiations and coordination follow, as well as the preparation of the purchase contract. The contract will specify the structure, price and terms of the transaction. It obliges both parties to do what they can to successfully complete the sales process. However, the concluded sales contract does not mean the end of the sale process, but only defines the content of the mutual relationship between the parties, their responsibility and the course of the further procedure.
The contract contains guarantees, guarantees and commitments that are very important for the smooth and successful completion of the sale of the company, and therefore constitute an important part of the negotiations. After signing the contract, there is a period within which both the buyer and the seller must adhere to the articles of the sales contract. The seller must hand over the company to the buyer at the agreed time and condition, and the buyer must pay the purchase price. After the sale and handover of the company is completed, there are usually agreed commitments that both buyers and sellers must adhere to.
Immediately after taking over the company, there is an even shorter period when the seller trains you or passes on the essential knowledge to make your entrepreneurial path as successful as possible.
