Knowledge base item

An acquisition to grow: Is this the moment?

Expansion through the purchase of a business

You want to expand your business. This can be done through organic growth, you slowly but surely attract new customers, you hire new employees and the figures show an increase in turnover. This is not always possible, for example due to a tight labor market, because you do not have certain technologies, knowledge or facilities in house or because external factors influence the market (for example during the Corona crisis). If organic growth is not an option, your company can always grow by acquiring another company. What should you then pay attention to?

Buy & Build strategy, a conscious choice

Just buying is not something we believe in at Florijnz. Buying a company is ideally first part of a well thought out strategy, such as a buy & build strategy. A buy & build strategy consists of taking over another company and then incorporating it into your own company. By merging two companies, increased efficiency can be achieved. Two companies together can share costs and achieve synergies that would not be possible separately.

The effects of the Coronavirus

If you are currently considering buying a business, you will have to take into account the current situation. Depending on the sector, this offers opportunities for buying entrepreneurs who have enough cash in house to be able to switch quickly. Companies that can be brought back to their old level relatively easily after the economy has recovered, are good takeover candidates at the moment.

The preparation of a purchase process

Before you embark on an acquisition process, it is important to make the right preparations and work out your strategy. The first step is to determine your goal: what is it that you want to achieve with the acquisition process? This may, for example, be about realising (turnover) growth, achieving synergies or acquiring facilities or knowledge. Once you have a clear objective in mind, it is time to look at potential acquisition candidates. Which companies are suitable for acquisition in order to achieve your goal? After you have found these companies, it is time to contact and talk to the relevant management. The company will need to be valued by an expert to provide a basis for the initial bid. A business valuation can serve as a guideline for the negotiations. The corona crisis creates a special situation, so that the valuation of a company during this time requires specific knowledge. This financial knowledge is required in order to assess the risks of a takeover candidate that may not be able to meet its payment obligations in the foreseeable future.

The importance of an independent advisor

During an acquisition process it is important, for the reasons mentioned above, to hire an experienced acquisition advisor. An advisor can point out possible pitfalls and risks, to make the acquisition process as smooth as possible. The team of Florijnz can support you throughout the process. Our team has experience in more than 150 projects, so we are familiar with almost every situation. We can help you with the purchase preparation, formulating goals, thinking about the best strategic steps to take, the communication with potential acquisition targets and the valuation to have a proper basis for when the negotiations start. Furthermore we can support you during the due diligence, so you can take over the company with a safe feeling. At Florijnz we relieve you during the entire process. We do all this with the aim of completing a successful, but above all sustainable transaction for you.

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Stef Kolen
Stef KolenCorporate Finance Advisor

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