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Buy-Side Acquisitions: Things You Should Consider

If you’re considering acquiring a new business in the future, there are several things you need to consider. If the timing and market conditions are right, a strategic acquisition can help grow your business. The buy-side process is complex, and an M&A can provide guidance. Here are a few things to keep in mind.

Why You Should Consider a Buy-Side Acquisition

A strategic acquisition provides many benefits for agencies. They can expand and diversify your client list and markets, improve profitability, increase revenue, and allow you to strategically grow your service offerings.

Preparing for a Strategic Acquisition

When acquiring a business, you need to first identify your main objectives in doing so. Is your primary goal to expand your client list and offerings or to increase profit and revenue? This allows you to narrow down your list of potential businesses to acquire and focus on an acquisition that meets your main goal. You’ll also want to team up with an M&A advisor and expect to spend a lot of time and effort finding the right agency to acquire and seeing the process through to the end.

6 Things to Consider for a Buy-Side Acquisition

Acquiring an agency is a strategic move. Here are six considerations you should have during the process:

  1. Valuation: Have a value in mind for the company you want to acquire. Smaller firms are often valued lower, and you need to know how much money you can invest before going farther into the process.
  2. Process: Have a clear idea of what kind of firm you want to acquire. Work with an M&A advisor to determine the type of agency and size, the region it’s located in, the services it offers, and the role of the current owners.
  3. Financing: Consider all your financing options and the pros and cons of each. You have several choices for how you plan to finance your acquisition, including cash payments, credits for lenders, seller notes, bank financing, and raising capital.
  4. Transaction Structure: Consider different transaction structures you can negotiate with the seller. For instance, you can consider a profit-driven model or choose to pursue an “acqui-hire.”  
  5. Customer Relationships: Evaluate the client list of the company you’re looking to acquire and set a plan for how to plan to maintain these relationships moving forward.  
  6. Risk: Everything business acquisition has its risks. Make sure you’re aware of the financial, organizational, and operational risks of the acquisition, and make the choice that best fits your experience level and financial situation.

There is a lot you need to consider when acquiring a new business, which is why it’s so crucial to have an experienced M&A advisor like Clare Advisors by your side.

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