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How to Best Prepare Your Firm for an Acquisition

On Behalf of | Mar 4, 2021 | Business

Merging or selling your company can be a difficult decision for many professionals. If you are the owner of your company, you have probably spent years building up your company. The steps you take to prepare your firm for acquisition are critical. Preparation before the acquisition helps the process move smoothly and decreases the likelihood of legal challenges down the road. We will discuss several tips for preparing your firm for an acquisition below.

Get Your Firm’s Finances in Order

The process of acquisition is typically complex. If your company is publicly traded, the process will be even longer and more complex. Before you even begin the acquisition process, we recommend carefully reviewing your firm’s financial history. Doing so can allow you to make sure the sale goes through smoothly. Engaging in a careful review can also help you become aware of any liabilities you have during the acquisition process.

An experienced acquisition lawyer and professional accountant can help you resolve many of the issues you may discover before the acquisition process begins. Having an in-depth understanding of your financial situation will also help you during the negotiation process.

Obtain Beneficial Clients and Partnerships

When companies consider acquiring your firm, they will look at every aspect of your company. They will analyze your customer bases and ensure that your best partnerships and clients will not leave the firm after the acquisition. Taking the time to keep your key clients and partners informed about the possible acquisition can help your firm. When your firm has loyal and satisfied customers, they will be more likely to stay with your firm after the acquisition and contribute to your firm’s overall stability.

Understand Your Narrative

Now more than ever, having a company-wide narrative is essential. You should work with your public relations and marketing team to make sure you have a credible and compelling story to tell about the acquisition after it happens. Your company will likely receive some media attention, and you should use that attention for your benefit.

Negotiate the Right Price

Once you have decided to sell your company, determining the optimal price becomes crucial.  You have worked hard to make your company profitable, and you need to ensure that you receive a fair amount of compensation. The best way to set a reasonable price for your company is to review your firm’s revenues and debt carefully. Potential buyers will consider your industry, your unique client characteristics, the technology you use, your staff’s capabilities, and more when they decide to make an offer. Excessively high prices can push potential buyers away. On the other hand, setting your price too low can cause potential buyers to have concerns about your business.

Wait for the Best Offer

Once you decide to sell your business, it can be easy to accept the highest bidder and begin the process of acquisition. However, the best path for your firm may not involve choosing the highest bidder. The buyer of your firm will have a significant impact on the financial success of your company. It can be worth waiting for the right buyer to achieve your goals, and attempting to push the sale forward can diminish the price in the end.

Involve Experts from the Start

Engaging in an acquisition is a complicated process, and you should not do it alone. Working with the right experts, such as attorneys, tax advisors, and bankers, can be crucial when preparing for an acquisition. These financial and legal experts can help you optimize the acquisition process and protect your right as you go through the acquisition. Should any issues arise, they will already have an in-depth understanding of your company’s financial situation and help you resolve the issues as effectively and quickly as possible.

Conduct Due Diligence

The due diligence process is one of the most critical hurdles firms must overcome before acquiring them. During the due diligence process, the buyer will carefully inspect its affairs, including its legal affairs, finances, and technology. The buyer engages in the due diligence process to ensure that everything is in good order before he or she commits to the acquisition. The company that will be acquired should ensure that it can make it thorough due diligence.

When the buyer uncovers significant issues with the firm during the due diligence process, he or she may decide not to move forward with the acquisition. The buyer may also request that the firm make changes in the deal structure or request other types of changes.

In some cases, information uncovered during the due diligence process leads the potential buyer to reduce the purchase price or requirement indemnification. Working with acquisition lawyers who understand the due diligence process will help you tremendously. Experienced lawyers will be able to anticipate any issues that arise and negotiate with the buyer effectively.

Communicate With Your Management Team

When you go through the acquisition process, your management team must be on board. Your managers are a crucial aspect of your company’s success. You will want to ensure that you can retain the best and brightest employees within your talent pool after the acquisition occurs. It is often wise to create an open communication environment to keep your management team informed in the opposition. The more involved they feel, the better prepared they will be after the acquisition is finalized. When managers feel like they have a stake in what is happening, the a’re more likely to work hard to promote your firm’s interests throughout the entire acquisition process.

Contact a Chicago Acquisition Lawyer Today

If you were considering an acquisition, you need an experienced legal team on your side. AtAU LLC, we provide our clients with skilled, experienced legal representation in the area of acquisitions. We have a proven track record of successfully helping clients across the country with the acquisition process. Contact our attorney today to learn how we can help your company.