When considering whether or not to buy out a business, the most important thing to do is to find out what the business valuation is. You’ll need to know what the business is worth in regards to assets and debts to see if it will be a worthwhile purchase or addition for you. It’s commonly accepted to outsource this to a business valuation firm. This is because business valuation services can give you an unbiased view of what they find that the business is worth. Valuation results can fluctuate and be influenced by the need and desire of the business therefore the value is not absolute. Finding a small business valuation model that works to give you an outside view is preferable for an honest opinion. There are other things that you should also consider when looking to a company besides the value. While your outsourced company is finding that out, here are some other considerations that you should keep in mind.
- Current employees – these are the people that work for you right now. You need to make sure that they will stick around if you were to merge with another business or get bigger by buying one out right. You’ll have to make sure that they know they are still appreciated and needed and that you will be needing their services and hard work now more than ever. Many times during a merger or buy out, old employees feel kicked to the curb and like their opinion wouldn’t be heard. It may be a good idea to talk to them before making the final decision to include them in the decision making process.
- The other company’s employees – you will have to decide if you want any of the employees to stick around of if there are going to be lay offs. It can be a difficult decision but should be made unemotionally and from a business standpoint only.
This is referring to the culture of the business. Right now, you company has probably established a certain atmosphere that the employees enjoy or they would not be there. Consider how the culture or atmosphere is going to change by expanding your business. It will be up to you as their leader to ensure that the culture stays the same. However, the current employees do share in the responsibility to make any new comers feel welcome and to introduce them to the way that things are run there.
The hierarchy of your business may automatically change, especially if you are bringing on the former boss of the other company as a partner or manager. All employees will need to be able to accept the changes and respect the new chain of command if there is going to be one. Keeping the same structure will be difficult as appealing as it is. Preparing the staff for what might happen is a good idea to help them not be shocked at any major changes.
Are you going to be bringing anyone on to the management team? It’s usually best to promote from within your existing company rather than from the company you are buying. Several reasons for this include:
- You already know the ability and work ethic of those on your current team.
- If you promote the newcomers, the current team may feel unappreciated and overlooked.
- Promoting newcomers can stir up resentment and division.
- The current team already understands the business as it is.
- They already know you and what you expect of them.
There are a lot of changes ahead, should the business valuation come back in your favor. While it is definitely a good idea to talk to your current team and prepare them for what is coming as best you can, your current employees aren’t the only ones that need to prepare themselves for the road ahead. For all intents and purposes, they need to keep doing what they’ve always done despite the surrounding circumstances. But you, however, as the owner, are about the undergo one of the biggest challenges that you have ever faced. The decisions you make and how you handle yourself will determine if it is a success or failure.