Most Common Questions to Ask When Acquiring a Business

When acquiring a business, deal rooms can be a key consideration. They securely store financial and other confidential documents related to the deal. This allows those involved in the acquisition to access the information they need in one place. Ask the right questions to make sure you have all the information you need when using a deal room during acquisition. Here are some of the most common questions that deal makers should ask when acquiring a business: 

What Is the Company’s Current Financial Status?

When acquiring a business, understand the company's current financial situation. This can be done by examining the company's balance sheet, income statement, and cash flow statements. This can help you understand the company's profitability, liquidity, and solvency.

What Is the Deal Structure?

When acquiring a business, understand the deal structure. This will help make sure that all parties involved in the transaction have an accurate understanding of the terms and conditions of the deal. The deal structure involves considerations such as:

● Purchase price

● Payment terms

● Contingencies

Who Are the Owners and Key Employees?

When considering a business acquisition, gather information regarding the company's current owners and key employees. This will allow you to understand better the team that runs the business and any relationships between them. This has to be cleared in detail when it comes to travel companies like Globorati. 

Are There Any Current or Pending Lawsuits?

Before acquiring a business, determine if any current or pending lawsuits may affect the deal. Potential buyers should ask for copies of all legal documents. These include any contractual agreements or court filings and review these documents closely. Knowing if the company has sufficient insurance to cover potential liabilities is also a key step.

What Are the Terms of Commercial and Non-commercial Contracts?

When acquiring a business, understand the terms of any commercial and non-commercial contracts associated with the deal. You should ask for copies of all contracts and review them closely. This includes supplier agreements, customer agreements, license agreements, and loan documents. 

What Due Diligence Materials Exist?

Reviewing existing due diligence materials is a significant process when acquiring a business. This includes financial statements, legal documents, management reports, research reports, customer data, and more. Review the company's history to understand any risks or opportunities associated with the deal. You can utilize a virtual deal room to safely share this information between the buyer and seller.

What Non-financial Resources Are Included in the Deal?

When acquiring a business, understand what non-financial resources will be included in the deal. This includes intangible assets such as patents, trademarks, copyrights, customer relationships, and supplier relationships. Consider workforce issues such as employee contracts, union agreements, and benefits. Review any licenses or regulatory requirements associated with the deal.

What Are the Competitive Advantages of the Business?

When examining a business acquisition deal, understand the competitive advantages of the deal. This includes any competitive advantages associated with the company's products or services, such as cost savings or a unique product offering. Consider any competitive advantages associated with the company's market position, including its brand recognition and presence in multiple markets.

Consider the deal from both a short-term and long-term perspective to determine if it will yield any competitive advantages for the acquirer.

What Is the Company’s Customer Base Like?

When acquiring a business, consider the customer base of the deal. Review customer data, such as customer demographics, purchasing habits, and feedback. Investigate the company's current and past relationships with customers to understand their level of loyalty. Investigate any existing customer complaints and their causes to determine if you can rectify them.

What Is the Company’s Track Record of Performance?

When examining a business acquisition deal, understand the company's performance record. This includes reviewing past financial statements, such as balance sheets, income, and cash flow statements. Review the company's historical growth rates and profitability trends to understand its overall performance.

Has the Deal Been Valued Properly?

When examining a business acquisition deal, make sure it has been appropriately valued. Consider obtaining an independent valuation to confirm the deal's price and terms, as well as any associated liabilities or contingencies. Consider all potential factors influencing the deal's value, including market conditions, competitive advantages, and customer loyalty.

Use a Deal Room When Acquiring a Business

With the help of a deal room, you may be able to gain an understanding of deal structures and potential risks. You can safely discuss information and negotiate while using a virtual deal room. You will also be able to share key documents with deal room software. Find a deal room vendor for your business acquisition today.