Sometimes when looking at business growth, there are other opportunities than internal growth, that is mergers and acquisitions. Mergers are when you have two businesses that come together to create one bigger business, while acquisitions are where you buy another business. Generally, with a merger, the staff comes across and the owner comes across to the new business, whereas an acquisition staff will come across, but the owner may or may not, and there will be a period of time that they stay on for.
The joyful thing about having a merger or an acquisition is you’ve got automatic cash flow from day one, rather than a slow gradual build, if you’re building your business internally. The flip side is, there’s a cost to do this. Because you sometimes need to borrow to be able to merge, or maybe not merge, maybe an acquisition. But with a merger, it’s really important that you’ve got the people right, that the people that you’re merging with, have the same goals as you the same ethics as you. The actual merge business may not be a 50-50 merger, it could be different proportions.
For instance, 15 years years ago, we merged HBA Accounting with Encompass Tax and Accounting to form HBA Encompass. Darren and I came together, and our client bases weren’t the same level. We came in at a different percentage of ownership. There’s nothing that’s set-in stone, the way that you need to do this.
The best thing that you can do is talk to a merger and acquisition specialist and talk to your accountant to work out the best entity moving forward the best structure, how it all fits together, and ultimately making sure that one plus one equals three, not one plus one equals two, because otherwise you may as well just have what you’ve got. Ultimately, mergers and acquisitions are a very good way in creating business growth, especially if you don’t have capacity in your business. But someone else may have capacity, but may not want to drive it but you can then put them together to achieve an awesome
Sometimes when looking at business growth, there are other opportunities than internal growth, that is mergers and acquisitions. Mergers are when you have two businesses that come together to create one bigger business, while acquisitions are where you buy another business. Generally, with a merger, the staff comes across and the owner comes across to the new business, whereas an acquisition staff will come across, but the owner may or may not, and there will be a period of time that they stay on for.
The joyful thing about having a merger or an acquisition is you’ve got automatic cash flow from day one, rather than a slow gradual build, if you’re building your business internally. The flip side is, there’s a cost to do this. Because you sometimes need to borrow to be able to merge, or maybe not merge, maybe an acquisition. But with a merger, it’s really important that you’ve got the people right, that the people that you’re merging with, have the same goals as you the same ethics as you. The actual merge business may not be a 50-50 merger, it could be different proportions.
For instance, 15 years years ago, we merged HBA Accounting with Encompass Tax and Accounting to form HBA Encompass. Darren and I came together, and our client bases weren’t the same level. We came in at a different percentage of ownership. There’s nothing that’s set-in stone, the way that you need to do this.
The best thing that you can do is talk to a merger and acquisition specialist and talk to your accountant to work out the best entity moving forward the best structure, how it all fits together, and ultimately making sure that one plus one equals three, not one plus one equals two, because otherwise you may as well just have what you’ve got. Ultimately, mergers and acquisitions are a very good way in creating business growth, especially if you don’t have capacity in your business. But someone else may have capacity, but may not want to drive it but you can then put them together to achieve an awesome