An add-on acquisition is when a company is added by a private equity firm to one of its platform companies or by a strategic buyer in which the acquired company becomes part of an existing company. For private equity, add-on acquisitions are valuable because they can add value to their platform or act as a means of inorganic growth prior to sale. They can also increase product offerings, eliminate duplicate management, boost buying power, lower costs by merging sales staff with similar expertise, and more. In addition, this process will help a company to grow geographically, meaning they can reach more people and have a better understanding of the market in that specific area.
Although this process has many opportunities, there are also risks of add-on acquisitions. One of the risks is that the acquired company has challenges with integration. This can include labor issues that need to be resolved, spending habits, management style, and workplace culture. Problems can also arise if there’s poor planning; there should be a long-term strategy for this plan. If there’s not, problems may arise in the future even if you successfully integrated the new company. At the beginning of the process, you should also review the acquired business’ current accounting process, including their financial statements. That way they won’t be able to lie about important information such as their revenue numbers.
This process can be very beneficial to both companies involved, but it includes some risk. Due to this, you should make sure to hire an add-on acquisition Connecticut lawyer. Add-on acquisition Connecticut lawyers will thoroughly evaluate the investment and advise you on structuring bids, negotiate and draft acquisition agreements, and provide support throughout the deal.
During this process, you’ll aim grow your company while improving your business as much as possible. To get the best results, make sure to hire an add-on acquisition Connecticut attorney so that they can recommend the best way to handle this process.