A business is about so much more than just its bottom line. While it is essential to consider a business’s “figures” when looking to buy another company, it’s crucial to realize that just because a company currently turns a profit does not mean it will continue to do so if you take it over.
A poor cultural fit has led to the ultimate failure of many acquisitions that should have worked on paper. That’s because business is often about people, and the other company’s employees and customers might not hold the same values as you, your staff and customers, which can lead to problems.
An example
Imagine that you own a chain of bicycle stores. You focus on providing bicycles everyone can afford and a fast turnaround on repairs. You see a local bike shop doing well in an area of the state you would like to have a presence in. If you go in with a decent offer, you figure the store owner will happily sell and you will gain their current customers and the opportunity to expand to new clientele in the area.
Yet, maybe the reason the business is doing so well is cultural rather than strategic. Perhaps, the reason it has such a loyal customer base is because it is small and owner-operated or because it offers products made by local artisans rather than larger manufacturers.
The mere association of a larger chain like yours with the store may send the employees and customers running elsewhere. In short, people worked and shopped there because of the culture it offered. Even if some employees and customers stay, many may leave once you introduce new ways of doing things that clash with their values.
There’s so much to consider when seeking to acquire a business. Getting legal help increases the chance that you’ll cover all angles and better ensure your future business success.