A recent study has revealed that the number of business acquisitions looks set to increase during 2012. The report, carried out by Venture Finance, indicates an increased interest by businesses to make an acquisition, with a quarter intending to negotiate a deal within the coming six months.
However, the report also reveals a lack of experience in the acquisition process among business owners, which could create problems for the acquiring businesses. A quarter of the 500 Small and Medium Enterprises that were surveyed said they intended to make an acquisition within the next 12 months. Worryingly, a third of the SMEs admitted they had no knowledge of how to undertake a business acquisition or a merger. Over a third of SMEs said they had no idea how to initiate a business acquisition.
According to Steve Websdale from Venture Finance, although businesses may find themselves in a sound position and ready to undertake a business acquisition, they have to consider all aspects before negotiating a deal in order to avoid a financial headache later. Websdale said:
“It’s important for those considering acquisitions to take the right advice. It is important to understand how assets can be best used. Businesses will need to create the financial headroom required to make these deals work and to prevent a loss of liquidity in the crucial post-acquisition phase.”
Negotiating a business acquisition is a complex process, and professional advice should be sought. The existing business also has to be managed during the acquisition process, to maintain a solid position in the period prior to the acquisition.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox