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Acquisition refers to the purchase of another business. In addition to the issues faced by any business making an acquisition, such as funding, operations, employees, customers, technology, etc., family businesses often face special concerns regarding balancing capital and liquidity needs, and the different life stages and life goals of different generations. (de Visscher, Aronoff & Ward, 1995).


Potential Issues with Acquisition

Acquisitions can be very risky and complex, effecting stakeholders, reputation, brand, and productivity. There are a number of problems that can arise when a company is looking to sell that can delay or put an immediate stop to the acquisition deal. The problem can be anything from a large legal issue, to a minor problem that can create fear and distrust between the seller and the buyer (Aronson, 1). Potential issues can include, but are not limited to:

-Major Contracts: Business contracts that the seller has in place prior to and at the time of sale can be a point of contention for acquisitions. The seller should disclose all terms of contract and include details on all contracts in place and the implications of those contracts for the buyer (Aronson, 1).

-Litigation: Sellers should resolve litigation before the business is sold. A buyer will always imagine the worst when an acquisition target is sued or a lawsuit is threatened (Aronson, 1).

-Employee Agreements: Sellers should plan early for acquisitions and have key employees sign non-compete agreements. Employees can be one of the most valuable company assets (Aronson, 1).

-Misrepresentation: When buyers are looking to acquire other companies they are often attracted to something they do not have, which can be a product or a technology used for product creation or business (Aronson, 1). The seller will want to be sure that they do not misrepresent all that they are promising when they are disclosing information about these products or technologies. The specs of the products and technology will need to be consistent with what the product actually is, and is not.




References

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Categories: Growth , Mergers and acquisitions