How do we value a business, especially if it is a service based company? How do we value the people who have put in countless hours at work to make it work? How do we value knowledge and how can we implement the knowledge management in case the business is bought by a new team?
For us to understand how the operations of a company are running we need to look into its management and see who they actually are, and find out why they are successful and what it took to reach them where there are now.
Do they have a "Star" player, who is difficult to replace? Than we have to figure out what value additional we can bring it, what is our game plan? Do, we have players in our team with definite goals and a burning desires to achieve it? Remember there are few men of action and rest are men of dream. Dreams evaporate without actions.
We have to remember that buying something is easy, even fools can do it but there is a difference to doing it and doing it right. It is very important that one know what will be end result and how the goals need to be implemented.
The key internal questions need to be answered can be divided into:1. Internal acquisition questions:
2. Target company questions:
- Is it the business one wants to enter?
- How long will it take to learn everything or what will be transition period?
- Have we set up a management team for acquisition and for post acquisition?
- Have we laid out everything in a time framework manner?
- Have we set up the benchmark?
- What are the key management backgrounds for the acquisition company?
- What are the key management members' salaries?
- Do they have a contract?
- Also, a non- compete agreement is in place for the key management?
- What are the management capabilities of persons in charge of key departments?
- What control do major stockholders exercise over the business's policies and activities?
Once we are able to answer, these questions we are in a position to take a decision which is practical and informative. Our aspirations are our possibilitiesRobin C. Trehan is an industry consultant in the field of mergers and acquisitions. He can be reached at email@example.com