Thinking Of Buying Your Competitor? Here’s How To Do It
In business, there are a lot of different strategies that companies can use in order to gain a competitive edge.
One of those strategies is known as “acquiring your competitor.”
The idea behind acquiring your competitor is simple: if you can’t beat them, then buy them. By buying up your competition, you’ll be able to eliminate them as a threat and consolidate your position in the market.
Of course, acquiring your competitor is not always a simple process. There are a lot of different factors that need to be considered before making such a move. In this article, we’ll take a look at some of the things you need to think about if you’re considering acquiring your competitor.
10 Steps To Acquire Your Competitor
1. Define your goals
Before you even think about acquiring your competitor, you need to have a clear understanding of why you want to do it. What are your goals? Are you looking to eliminate a threat? Are you trying to consolidate your position in the market?
2. Do your research
Once you know why you want to acquire your competitor, you need to do your homework and research the company thoroughly. How much is the company worth? What are their key assets? What is their debt situation?
You’ll also need to take a look at the people who run the company. Do they have any experience running a business of this size? Would they be willing to stay on after an acquisition? Mergers and Acquisitions take a long time so decent research is paramount.
3. Crunch the numbers
Once you’ve done your research, it’s time to start crunching the numbers. How much would it cost to buy the company? Can you afford it? Would the acquisition be accretive to earnings?
You’ll also need to think about how you would finance the deal. Would you need to take on debt? Would you need to sell some of your own assets?
4. Prepare an offer
Once you’ve decided that acquiring your competitor is the right move for your business, it’s time to prepare an offer. This is where working with a good investment banker can come in handy. They can help you put together a competitive offer that will give you the best chance of success.
5. Negotiate the deal
Once your offer is on the table, it’s time to start negotiating with the other side. This can be a tricky process, as you’ll need to find the right balance between getting the best price and not overpaying.
You’ll also need to think about how you’ll structure the deal. Will you be paying cash? Will you be issuing stock?
6. Get financing in place
If you’re going to be financing the acquisition with debt, then you’ll need to get that financing in place before moving forward. This usually involves working with a bank or other financial institution.
You’ll need to have a good understanding of your financial situation and have a solid plan in place for how you’ll repay the debt.
7. Due diligence
Once the offer is accepted, and the financing is in place, it’s time to start the due diligence process. This is where you’ll look at the books of the company you’re acquiring and make sure that everything is in order.
You’ll also need to negotiate any final terms of the deal during this process.
8. Get approval from shareholders
If you’re a public company, then you’ll need to get approval from your shareholders before moving forward with the acquisition. This usually involves holding a shareholder meeting and getting a majority of votes in favour of the deal.
9. Complete the deal
Once all of the paperwork is signed, and the financing is in place, it’s time to complete the deal. This usually involves transferring ownership of the company and completing any necessary regulatory filings.
10. Integrate the company
After the acquisition is complete, you’ll need to start thinking about how you’re going to integrate the company into your own business. This can be a tricky process, as you’ll need to make sure that both companies are able to operate efficiently.
You’ll also need to think about things like branding and employee morale.
The Bottom Line
Acquiring your competitor can be a great way to consolidate your position in the market. However, it’s not a decision that should be made lightly. You’ll need to do your research and crunch the numbers to make sure that it’s the right move for your business. Once you’ve decided to go ahead with the acquisition, you’ll need to prepare an offer and negotiate the deal. Once the deal is complete, you’ll need to start thinking about how you’re going to integrate the company into your own business.