Acquiring a company
Rather than creating a company, you might want to take the option of buying an existing business. This strategy enables you to launch your business project with a ready-functioning company. There are many advantages to this approach, but there are some significant risks as well.
The many advantages of buying an existing structure (providing the company is prospering) include:
- A recognised, existing client base in one or more geographical sector(s)
- Established relationships with suppliers, banks and service providers
- Services, teams and IT systems (depending on the size and structure of the company)
- A lever for building trust with financial institutions (providing the business purchased is profitable)
There are, however, risks in purchasing a company and they should not be overlooked. These risks may be smaller or larger depending on the context, and relate to:
- The reaction of corporate partners
- How well the transition of power goes
- The motivation and commitment levels of the teams
- The maturity of the market and its impact on the company’s future
The head of the company’s objective in disposing of the business is also a factor. It is, therefore, important to ask him/her about why he/she is selling it. There may, of course, be “hidden” reasons (such as cash flow problems, for example).
It is, therefore essential to have support throughout the research and purchasing phase and to hold in-depth discussions with the head of the company selling his/her organisation.