The Top Experts You Need on Your Business Acquisition Journey

They say “it takes a village to raise a child.” Well, we believe that the whole journey of closing the purchase, owning, and operating a business is strikingly similar to raising a child. 

Throughout each step of the acquisition process, we need to turn to different experts and professionals to help us move forward with the deal. You should begin compiling your list of vendors as soon as possible, but that effort will pay dividends when you get nearer to closing the deal, and it will be especially helpful as you pursue post-acquisition growth.

That’s why it’s integral to assemble a directory of resources that you can call on to help you – your village. You might think of this directory as a modern-day Rolodex. Whatever you call it, you should be able to use these resources as you need them to ensure a seamless and well-thought-out process from the very beginning of your acquisition journey until the day you take possession of the keys – and after!

Who Needs To Be In The Directory of Resources?

Each stage of the process requires different experts and professionals to make the deal as smooth as possible. Of course, the Acquisition Entrepreneur can handle many of these things. Still, that option could lead to additional headaches, confusion, and more time spent on a deal than is necessary.

The Directory should include contacts of all vendors you will work with during the acquisition process. Below is a list of various professionals you will encounter on the journey, what services they provide, and why they should be included in your Rolodex.

Brokers

Business brokers are individuals or companies that assist in the purchase and sale of small and mid-sized businesses. If you’re able to establish a relationship with a business broker, it will often help you find deals earlier than other AEs.

Brokers are the first step to finding businesses you might want to acquire.
When: You’ll be contacting brokers as you analyze deals, create and iterate your investment thesis, and begin your deal search in earnest.

Legal

You will need specialized counsel on your legal team to advocate for your interests from the pre-LOI stage onward. They will be heavily involved in drafting the LOI, in the legal aspects of your due diligence, in determining the acquiring entity to be used, and in the offer itself. 

For example, during due diligence, they will review the seller’s contracts with vendors, customers, and employees, advise on licensing, look for pending or actual legal action against the business, and examine warranties, trademarks, and patents – among other things.

When: You’ll need to speak to lawyers at several steps throughout the journey (more on that below), but expect to be in touch with them as early as the pre-Letter of Intent (LOI) diligence phase of the journey. You’ll also speak with them during the Letter of Intent, post-LOI diligence, and asset purchase agreement phases.

Industry Expert Consulting

Depending on the industry you are interested in and on your own degree of expertise in that industry, there is a good chance you will need to consult with experts. In particular, you may need a pricing expert who knows the local market and can recommend adjustments to prices or margins.

When: These consultants come in handy during the initial search phase and when you start to look at post-acquisition growth.

SBA Lenders

This one is pretty straightforward. You need to look for the best terms to fund your deal, preferably with a local lender. You also need to decide whether to go with a mix-and-match approach to your financing, for example, by combining SBA lending with outside financing and/or seller financing.

When: You’ll need to speak with SBA lenders as you look for financing for your deal.

Integrators

If your business will be ACE (Acquira Certified Enterprise) integrated you will have to choose an integrator who will provide the most value based on the industry your business belongs to.

When: These people will come in handy during the post-acquisition growth phase.

Financial Firms

These CPAs and other financial experts will assist you with the QoE (Quality of Earnings) report and advise you on financial due diligence. They can also help you secure non-SBA lenders if needed, decide whether to take funds from your 401(k) or Roth IRA, and prepare your taxes pre-close.

Financial firms can also come in handy during the finer-grained due diligence process, which requires working closely with the owner or a designate – for example, to map source documents to the financial statements that are based on them. As you do this, you will get a clear idea of process flows in the business, the efficacy of systems in place, and what opportunities there are for improving their design.

You can do this by yourself or hire a firm to do much of it for you. This is a matter of personal preference and, of course, cost. Bear in mind that if you hire outside help, however, it’s unwise to abdicate responsibility completely. You will most likely still have to ensure that all areas are covered and that they are investigated in adequate detail.

When: You’ll speak with financial firms when you undertake due diligence and when you draft the asset purchase agreement.

Digital Marketing Agencies

Likely, the business you’re looking at doesn’t have much marketing experience, so it’s important to consider marketing strategy and compare offerings for digital marketing in the area. Oftentimes, there will be someone at your new business who can help with the basic setup for reviews. Still, once you grow the business, you’ll likely want to hire some experts to help you design vehicle wraps, website usability, advertising, and more.

When: These experts will come in handy during the post-acquisition growth phase.

IT Consulting

You will need to assess what computer systems are in place (if any), and your strategy and timeline for implementing new systems. 

These may include HR, finance, CSR, field service management systems, and/or entire ERP suites. (Note that many of the offerings in the previous sentence have overlapping functionality.) Unless you have an IT background, you should consider external help for system choice and implementation.

When: These experts will come in handy during the post-acquisition growth phase.

Staffing Agencies and Training Agencies

The use of these types of agencies may be a useful stop-gap measure immediately after you close. Before you have an HR department, it might be challenging to find and hire new personnel. You may also need help in creating an effective training system during onboarding.

When: These experts will come in handy during the post-acquisition growth phase.

Equipment and Supplies Vendors

It is likely that the company will already have an extensive list of vendors that they know and trust. But it doesn’t hurt to look around for better prices and maybe even higher-quality materials.

When: These experts will come in handy during the post-acquisition growth phase.

Vehicle Procurement Relationships

If your business will need new vehicles, then you need to start looking at your options ASAP. This applies equally to equipment and supplies set up in the vehicle’s interior. 

Ideally, each truck should have an identical interior set-up so any techs can easily access what they need regardless of the vehicle they are using. You can determine whether you will need vehicles by asking the seller for a detailed list of assets. You should also look at mileage, vehicle condition, and the current set-up of their interiors. 

Keep in mind that it is not always easy to acquire vehicles specific to your industry’s needs, especially with the recent supply chain constraints. So be prepared to move quickly.

When: These experts will come in handy during the post-acquisition growth phase.

Stages of the Business Buying Journey

While the business buying journey is unique to each Acquisition Entrepreneur (AE), the process can generally be broken up into universal stages. We detail each of these stages in our article “How To Buy A Business: The Complete Roadmap.”

1. Defining Your Investment Thesis

This is the very first thing you should do when you decide to buy a business. Acquira’s Success Coaches will work with Acquisition Entrepreneurs to help define and iterate on their investment thesis. The investment thesis is a set of rules defining what you will and won’t invest in.

Regarding what experts you should consult during this phase of the journey, you may want to talk to your accountant to help determine how much money you’re ready to invest and how high your risk tolerance is. You can also include Acquira in the directory at this stage.

2. The Search

Once you’ve defined your investment thesis and you know what you want to look for and where you want to look, you can begin looking at businesses for sale. Traditionally, this would require speaking with local business brokers or scouring sites like BizBuySell.

You should include any helpful brokers you come across in your directory – especially those who operate in an area where you want to buy a business.

You should also begin reaching out to SBA lenders around this stage.

3. Pre-LOI Diligence

Before you can even consider submitting any kind of proposal, you need to analyze the businesses you find. This phase requires you to be very skeptical about the business operations and finances. You should be ready to disqualify any deals that don’t match your investment thesis.

We’ve compiled a list of Pre-LOI Diligence questions that you can check out here.

At this journey stage, you should consult with accountants, lawyers, and Acquira’s Investment Committee to get honest feedback and insight on the business.

4. The Letter of Intent

Often referred to as an LOI, the Letter of Intent can be considered a written statement expressing the intention to engage in a business transaction. In the LOI, you will work with a legal team to refine the language of your initial agreement. You can work with your preferred legal team or Acquira’s legal team. Either way, you must include your lawyers in your Directory of Resources.

Here’s an interview with Acquira’s preferred legal team:

5. Post-LOI Diligence

Stages five and six generally happen in tandem but require input from different vendors. Post-LOI diligence will see you digging deeper into the financials and operations of the business. You should also be trying to get some insight into the company’s culture during this phase.

Your trusted lawyers and CPAs will be able to assist you during this stage of the journey. For members of our Accelerator program, Acquira can provide documents that have a few hundred questions to help make this process easier. They’re organized into different categories: financial operations, employee information, general information, IT, marketing, sales, and more. 

The most important part of this deeper diligence process is the quality of earnings (Q of E) analysis. This process will confirm the financial statements of your target business and ensure you aren’t making critical errors based on the financial statements you received from the seller.

6. Deal Financing

While conducting your due diligence, you should also be talking with an SBA lender. Ideally, you’ll get in touch with them early in the search process and speak with multiple lenders at a given time.

Of course, not everyone will qualify for SBA financing, while others might prefer more creative and flexible financing options. In this case, you should be speaking with private lenders and/or investors. 

The lender should be familiar with the business and the high-level terms of the deal by this point. You will want to include any potential lenders you speak to in your Directory.

7. The Asset Purchase Agreement

After you and your team have completed the due diligence process, you will still need to provide a number of things to the lender. This can include certain insurance policies and a third-party appraisal (be sure to add insurers and appraisers to your directory!). 

Once the loan has been approved and the seller has agreed, you will enter into an asset purchase agreement, also known as an APA. This is when your lawyers and the seller’s lawyers will go over the agreement and you will fully define how much involvement the seller will have after the purchase is complete.

Once the APA is agreed upon and signed, the lender will put you in touch with a Title Escrow Company to facilitate the exchange of money.

8. Post-Acquisition Growth

Defining “post-acquisition growth” as a phase of the business buying journey may seem reductive. After all, it can take years to truly see growth. But this is where you’ll find the greatest benefit of your Directory. As you build and integrate systems, hire and train new employees, and buy new and improved equipment, your list of vendors and resources will expand quickly.

Considerations For Building Your Directory

• Using your family and circle of friends as a resource for developing suggestions for your directory is common practice. If you’ve talked to them about buying a business, everyone will want to pitch in and help by suggesting services they used – or their very own services. This is convenient, and the people you trust are giving you high recommendations. But it is best to be a bit skeptical. Their proposed services may not be a perfect fit for your specialized needs, and their quality may run the gamut from perfect to middling to sub-par. 
• Do a BBB search in your area for the services you need.  You will get selections with less bias built in.
• Before hiring any of these resources, try to meet with them first.  This will give you an idea of their proficiency and how easy you will find it is to work with them.

Conclusion

Staying organized during the business acquisition search isn’t easy. Creating a comprehensive directory of vendors and other resources lets you know exactly who you should call on at each point along the journey.

Much of the information above is a small part of the latest training material we’re building, called The Last Mile. The Last Mile is designed to take you from the Letter of Intent to the closing of the deal. But the first step to buying a business is to sign up for our Accelerator Program.

The program is designed to find and close a business for you within seven months.

To learn more about our programs and how we can help on your business buying journey, schedule a call with us through the form below and someone will be in touch shortly.

Key Takeaways

• An effective Directory of Resources should include all vendors you encounter throughout the process of the deal.
• Do a BBB search in your area for the services you will be needing. You will get selections with less bias built-in.
• Before hiring anyone, try to meet with them first.
• Consider their suggestions, but don’t commit to them right away.