High Level Acquisition Questions

[jadent]

What questions should you ask if another company approaches your company with the intent of acquisition? At this point it is step 1, just to determine if its even worth investigating further and going to legal and evaluation.

Thanks for all the help and advice!

[akula]

hmmm bloody good question
find out if the acquirer has money, find out their alternative to negotiated agreement...but yeah...i can see your problem
teams i've been on have made acquisition offers in the past and we've kept the target pretty much in the dark about our financial position, motives and who else we are talking to..
and in these situations, the offer has usually failed
the instances where the deal does go through to diligence etc is when we've incurred reputation risk for making the offer
what i'm saying is that sometimes, the only way to know whether to investigate further is to size up the character of the person who's making the offer...such as, asking them to agreet to a break up fee!!
hhahaaha
ask for a break up fee...so you get paid if the deal flops..if they agree, that means they may be serious

[ZingerIntl]

Are you trying to sell? Or are they asking you if you want to sell?

Or are they asking you to buy?

I have done 4 acquisitions successfully (sold 2 of them later) and 2 unsuccessfully. Depending on what everyones motives are , what they stand to gain, your questions are going to be the same but your goals will be different. Give me more details and I will try to answer your questions.

From what you wrote, I think someone approached you to sell to them. What I would be doing is...
10 steps.
1) Non disclosure agreement signed
2) Proof of funds that they can close
3) Give them a rough number of what you gross last year and your total expenses. (Can be #1 if you are trusting)
4) Calculate your assets that they would be required to purchase to operate biz as you do.
5) Take yearly income, times it by 1.5, Add assets, add back your last years income and benefits (ex if the company paid for a trip to hawaii for "Looking for Real Estate investments") thats roughly the purchase price
6) Get a 2-4% non refundable deposit (shows they are serious)
7) Show them your books and real numbers from accountant. Give them 15-30 days to do due diligence
8) Get them to make an offer
9) Close
10) Take it to the bank

There is waaay more to an acquisition normally but this is a guideline.

A properly executed acquisition can make your company grow at a rate of 4-10 times the yearly average.

ps I am trained in creative finance and acquisitions so its not just my opinion I can give you