Buy-Side FAQs
For growth-minded business owners, acquiring another company can be part of an overall strategy to accelerate expansion and increase overall value. Purchasing a business can be a competitor, a complementary business, or a distressed opportunity, amongst other opportunities. An acquisition can open new doors if approached with the right planning and due diligence, but it always comes with risk. Beyond the financial investment, it requires a deep understanding of the target company’s operations, liabilities, and long-term potential. Owners must also assess how the acquisition aligns with their strategic goals and how the deal will impact existing operations.
Below are frequently asked questions to consider when planning to purchase or acquire a business:
What is the process of buying a business?
Every business acquisition is unique and has different intricacies and nuances. A standard process exists but with variations based on the specific business you aim to purchase. Business advisors, including attorneys, that have specific experience in the buying and selling of businesses are crucial to identifying the best steps forward to assure an ideal experience.
What kind of lawyer do I need for this transaction?
When purchasing a business there are likely many facets to consider that could require a team of lawyers with different specialties. To start the process an M&A attorney would be your key contact and should it be necessary would include other lawyers to facilitate specific needs. They also will work closely with other advisors including accountants, bankers and brokers.
What documents are involved in the purchase?
When purchasing or acquiring a business the main document is the Letter of Intent (LOI) or Term Sheet. The LOI occurs early in the process and an M&A attorney can help lay the groundwork for the impending purchase. Their involvement prior to the LOI can be instrumental in the success of the acquisition. Other documents include but are not limited to: Non-disclosure Agreement (NDA) Asset Purchase Agreement (APA) vs. Stock Purchase Agreement (SPA), Bill of Sale, IP Assignments, and Employment Agreements.
