08 Mar Around the Web: A Week in Summary
The recently published Axial article entitled “How Customer Due Diligence Led to a 30% Reduction in Offer Price” explains how important the due diligence process is for a prospective buyer during a business transaction. The author goes in-depth into a case study that demonstrates how proper due diligence can save a bad deal from coming to fruition, while giving examples from the case to show the effect that due diligence can have on a sale.
In the author’s case, further research into a business that seemed to have a great track record and excellent position in the market turned out some interesting information:
- Competitors were making progress
- Customer service could be improved
- Innovation was lacking
- Customer loyalty was much lower than average
These things could have easily been overlooked without a proper vetting and due diligence process, but since the business was researched thoroughly, the buyer was able to bring down their offer price by a significant amount.
The recent Forbes article “When Negotiating To Buy A Business – Attitude Is Everything” illustrates how negotiations can and should be treated with care, especially in regard to the attitude of the buyer. It explains how deals can take a quick turn due to things like struggles over non-negotiable points of interest or simply a bad attitude on the part of either the buyer or seller.
Money, of course, always comes into play at some point during negotiations, which is a point of contention and heavy negotiation. Understandably, money talks can draw out a lot of emotion: sellers want to make sure they are getting what they deserve and buyers want to get a deal that will be profitable in the long-term. It is so important for both parties to have respect and to build trust in these negotiations, as a deal can fall through easily if not treated with care.
In an article recently posted in Inc., “How to Sell Your Business – and Keep It Too,” several different case studies are presented that outline how larger companies buy up smaller ones for the purpose of acquiring their innovative technologies and products. Today’s business environment is full of pressure for things like increasing sales and investment into production in the U.S., but large companies often have trouble with true innovation.
In the past, corporations would acquire small businesses and either buy them out or hire them to work for their company without regard at all for the actual business that they bought. However in many cases now, things have changed: entrepreneurs are getting bought but are actually retaining control of their brand. This gives them both a big payday but also the ability to continue working on and developing the passion that is their business. Even better, these innovative entrepreneurs not only have security or funding, but access to a much larger pool of resources to run and grow their now-acquired venture.