Buying a business in Israel is a complex project. Proper preparation will save you many headaches later on.
Acquiring an operating company can help your business grow and diversify by providing an established customer base, eliminating a direct competitor, or making products, equipment and new opportunities available.
It can also help your company achieve greater synergy and pool common resources.
But buying a company without any consultation is like driving down the road without a GPS.
Here are 4 key questions to consider before taking the plunge:
Does this purchase make sense?
Don't buy a company just because you can.
You need to have a clear vision of the future you see for your business, and how an acquisition will help you achieve it. Will an acquisition increase your market share? Differentiate you from your competitors? Diversify your revenue streams?
BoardAvoid impulse buying. Your CPA, business advisor and banker can all help you determine whether an acquisition is the best course of action for your company in light of your overall strategic plan.
Is your company ready?
Entrepreneurs often don't think beyond the financial aspect.
You also need to ask yourself whether you'll be able to integrate the new acquisition into your existing business. Is your company structured to absorb this sudden growth?
Acquisitions can be disruptive. They bring with them an influx of new customers and employees, new infrastructure and organizational changes.
We recommend that entrepreneurs carry out a SWOT (strengths, weaknesses, opportunities, threats) analysis beforehand, and then consider how their company's current situation will change after the acquisition.
BoardTechnology can help you work more efficiently. Structured, system-linked workflows will make your life easier when the time comes to integrate a new company.
What's the impact on your business?
Acquiring a business brings with it financial obligations and operational changes that can quickly deplete your cash flow. Poorly managed, these changes can send your business into a tailspin.
That's why it's so important - once you've drawn up a shortlist of potential acquisition targets - to simulate different scenarios to assess how they will affect your business.
Read also: How do you determine a company's value?
Do you know what you're buying?
Buying a business in Israel is no different from any other purchase: you need to behave like an informed consumer. You want optimal value, compatibility and price. Ask yourself why a business is for sale and what lasting value it will bring, starting with the profits it generates.
BoardResearch the company you want to acquire. Learn as much as you can about the company, its employees and the industry or region in which it operates (if different from your own)..