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How to Buy a Business

Learn about the key issues involved in buying a business

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A half-day course

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This how to buy a business course is a ‘must know’ for anyone likely to be involved in buying into a business, as an adviser or principal, wishing to build their understanding of how to succeed in acquiring businesses or to help buying a business, including:

  • M&A professionals in investment banks, boutique advisory businesses, and the corporate finance arms of accountancy firms;
  • Corporate business development teams, where acquisition is a key part of their strategy;
  • Owner-managers of successful businesses, considering expansion by acquisition; and
  • Private equity professionals.

And a ‘nice to know for’:

  • Legal and other advisers involved in the M&A process, seeking a better understanding of how principals and their financial advisers initiate deals and negotiate terms.

The how to buy a business course is especially beneficial to those with some experience of the acquisition process who want to accelerate their understanding of what drives successful deals as well as lessons in tradecraft and different ways to approach a potential target to buy the company.  

  • Embraces both the theory and the practice of buying a business
  • Insight - Takes you through the whole process, from the search and the initial approach, to closing a deal and the issues involved in finalising terms
  • Best-practice tradecraft in all types of buy-side situations
  • Full discussion of how to define success – and of risks which need to be addressed
  • Become aware of where the value lies
  • Understand the soft side of acquisitions and the interests of all stakeholders – how to make your bid the most attractive when buying an existing business
  • The trainer has been involved in negotiating and closing M&A transactions for over 25 years.

  • Build confidence to help create shareholder value through the pursuit of a successful M&A strategy.
  • The course helps principals and their advisers appreciate the complex issues involved in acquiring a business, through a focus on risk and return, the acquisition process, investigation and valuing a target, and how to approach a target.
  • The content will, in particular, allow practitioners with less experience to accelerate their learning of the buy-side role, through discussion of tradecraft, case studies and best practices.
  • Highlight risk and how to mitigate - buyers overpaying, or using inappropriate financing methods, can trigger the destruction of value and in some cases financial distress.
  • Whilst this is a course on transactions, it also introduces best practices regarding post-deal planning and how to help ensure the acquisition is successful.
  • Ultimately, it is a walk-through of every aspect of buying a business – a practical guide to identifying and successfully negotiating acquisitions.

Why buy a business? Explore rationales and intent

  • Corporate evolutionary cycle
  • Organic growth vs alternatives
  • Joint ventures vs. acquisitions in company purchase
  • Demands for growth – PLCs with earnings expectations
  • General business theory: horizontal/ vertical integration; consolidate markets; geographic; product range etc
  • Other motives: Opportunistic, financial engineering, conglomerates – (now unfashionable – why?)

Acquisition search/ Target screening – principles

  • Clear basic parameters (e.g. size)
  • Defined objective (market, product etc)
  • Specific criteria (in and out)
  • Desk research and what an adviser can add
  • Identifying key decision makers

Valuing the target: basics

  • Principles of valuation: assets, earnings, market
  • Understand where the target value is likely to lie – reference points/ comparables, etc
  • Reasonable assumptions refinancing - is a deal affordable/ feasible?

Value creation framework

  • Financial analysis techniques
  • ROIC - WACC
  • Multiple arbitrage
  • Earnings enhancement/ dilution

Best practice for a buyer and their adviser – Buy side tradecraft

  • How to position a bilateral approach
  • Making the approach
  • Building credibility: key messages
  • Identify and address all stakeholders

Tactics in an auction bid process

  • How to ‘play well’
  • Working with limited information
  • Presenting your indicative offer
  • Case study – tactics to pre-empt an auction
  • Case study – how not to do it

Buying through a management buyout – how the role may differ

  • Advising a Private Equity house
  • Exit review
  • Advising a management team
  • Management terms

Buying from an administrator, or in a distressed situation – special characteristics

Due diligence

  • Dealing with VDD and databooks – buyer perspective
  • How to challenge seller’s presentation of earnings: quality of earnings, normalisation and proforma adjustments
  • Be clear on all the information you need – and what may be outstanding
  • Other diligence streams which add value – synergies, integration, operational
  • A framework for dealing with due diligence discoveries

Earn-outs: bridging headline differences on value

  • Case studies/ discussion – lessons from deals that did not work out

Heads of agreement and exclusivity

  • What exclusivity signifies – and what it takes to get there

Cash, debt and working capital – buyer perspective on the equity bridge and completion mechanisms

  • When a locked box (seller-friendly) may be appropriate/ should be accepted

Legal overview – what buyers should look for

  • Advantages of drafting the business purchase agreement
  • Warranties and indemnities
  • Disclosure letter – interaction with due diligence and deal terms
  • Escrow, retention

The trainer has worked for over thirty years in corporate finance and equity capital markets, completing transactions for clients from over thirty countries in Europe, the Americas and Asia Pacific. Most recently, he spent twelve years with the corporate finance arm of a Big Four firm, specialising in mid-market M&A transactions, working with SMEs in the UK across a range of M&A deals.

Creating shareholder value through the pursuit of a successful M & A strategy is widely practiced, but certainly not risk-free. Buyers overpaying or using inappropriate financing methods can destroy value and in some cases, trigger financial distress and the implosion of their own business.

The How to Buy a Business course, therefore, starts with a focus on how to create value through M & A, with a simple framework for assessing acquisition opportunities. There is also a section on how to plan and make sure an acquisition is successful.

The course then covers tradecraft around approaching acquisition targets, whether through widely marketed processes or ‘off market’, with a focus on best practices in each case, and the importance of being a ‘good buyer’ in all circumstances.

In addition, the course contains a valuation primer and guidance on final pricing.

How to Buy a Business is a practical guide to all aspects of the M & A process and will be useful to anyone on the buyside process in M & A, whether as an adviser or client.

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