As an entrepreneur, buying a business is a big decision that will require you to make many strategic changes when running a business. You not only need to manage your existing business but also ensure that the company you’ve acquired provides a good ROI. The main concern after acquiring a new venture is managing it properly, without compromising the profitability of the existing business. The first few months are vital, as they will define the direction of your business operations and establish an integration mechanism for your new business. All post-purchase activities require decisive planning, swift action, and results-oriented tactics.
What happens after I buy a business? Here’s what to expect:
The first thing you need to do is find a practical and quick way to integrate. If your existing business is in the same domain as the new one, it will be a little easier to merge the books. You won’t be acquiring the company separately; you’ll also be acquiring the resources. Furthermore, you’ll receive assets, human resources, liabilities, and other obligations. You can’t start from scratch unless you close existing contracts, figure out who to keep on board, and…
Initial Phase Requirements
In the excitement of acquiring a new business, many buyers rush into the integration and growth phase. However, accelerating growth will lead to many issues related to resource dispersion, mismanagement, and lack of information, wreaking havoc on the buyer. When you own a new business, the initial phase will require you to perform additional due diligence, review all responsibilities and books received from the previous owner, and conduct Q&A sessions with employees. You may find that the previous owner cannot set aside time for your post-purchase questions, so as a precaution, it’s best to schedule an appointment with the seller when preparing the purchase agreement.
Unexpected challenges
There’s a good chance a new business will bring unexpected challenges that the new owners may not have anticipated. When purchasing a company, you may be surprised to see the company employing different operational, strategic, and work mechanisms. Even if you own a similar company, you may discover that the company you acquired uses a different approach to managing day-to-day operations. While you don’t rely on high-tech software, the company you acquired may be using fully developed modern tools. You should anticipate many of these revelations once you own the business.
Dealing with stakeholders
Your business will require you to interact with all stakeholders, and you can expect some reservations at first. A company will have its employees, clients, contract agencies, and many other relationships, and unless you want to tear everything down and start from scratch, you’ll have to deal with all stakeholders. You’ll need to understand the existing organizational plan, create your new organizational structure, and effectively communicate your strategy to all stakeholders. Ideally, the first two months will be enough for you to align your vision with those you’d like to continue working with in your new business.
A competitive disadvantage
You may be a successful entrepreneur, but when you buy a company, you may discover that it has inherited a significant competitive disadvantage. Customers, suppliers, and even competitors of the business you purchased are more likely to view the company as weak, meaning you could quickly lose some business. A change in ownership may not sit well with many people, as they may perceive the company as struggling. The timing of the acquisition is crucial, especially when it comes to serving the new business’s core customers and then reaffirming and protecting relationships with all existing customers.
A complex exercise in change management
The worst-case scenario is being overwhelmed by the post-acquisition sales work that awaits you. Don’t be surprised, as change management is never easy. Stick to a proper team structure, implement strategies, and gain people’s trust. And it will be easier to settle in and take control of the new business. Most likely, the first six months after the acquisition will set the tone for your work according to your management style and strategy. Don’t hesitate to capitalize on existing best practices within the business. Complement them with your plans to increase overall profitability.
These are some things to anticipate. So, don’t expect surprises. Take on a new business, knowing what to expect, and also the strategic changes required in business management.
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