Acquiring a business can be a life-changing opportunity, especially for those looking to start fresh in a new country. Whether you’re an entrepreneur chasing the dream of owning a successful enterprise or an immigrant seeking to establish roots through a stable investment, the journey of buying a business is both exciting and challenging. However, it’s not just about writing a check and signing a contract—it’s about understanding the market, aligning the business with your skills and goals, and making informed decisions that pave the way for long-term success.
To begin with, careful planning and a step-by-step approach are essential. By doing so, you can confidently navigate the complexities of the acquisition process while avoiding costly mistakes. With that in mind, this guide will help you explore the critical factors to consider before taking the plunge, ensuring your business journey starts off on the right foot.
At Alliance Leman, we’re dedicated to supporting you throughout the decision-making process of acquiring a new business. That is why we’ve crafted the “Business beyond border” series to inform your decisions. These articles are written based on our involvement in the strategic acquisitions of top international companies. This article, is part one and offers a high-level roadmap to guide your acquisition journey.
Furthermore, we’ll dive deeper into each step of the decision-making process in a series of dedicated articles. These follow-up pieces will break down the complexities of market analysis, business evaluation, and acquisition strategies, offering actionable advice and real-world examples. Whether you’re an entrepreneur or an immigrant seeking new opportunities, our goal is to empower you with the tools and knowledge to succeed in your business venture.
In part 2, we provide you with frameworks to help you strategically approach your market selection. In part 3, we guide you to think strategically on deciding between buy or build. In part 4, we give you our guidelines for defining the best criteria to evaluate the target businesses against.
Selecting the right market is arguably the most critical step in planning to buy a business, as it lays the foundation for your success. The market you choose will determine your ability to grow, adapt, and navigate risks in a new and often unfamiliar business environment. For immigrants and newcomers especially, this decision is especially impactful, as it provides the opportunity to leverage unique skills, cultural insights, and professional networks to carve out a competitive advantage in your chosen market.
Moreover, a well-researched market selection process helps you minimize uncertainty and set the stage for sustainable success. For instance, whether you’re targeting an emerging industry with high growth potential or focusing on a stable, mature sector, ensuring alignment between your personal strengths and market dynamics is essential.
To help you choose the best market, you’ll need a structured approach to analyze its potential. Here are three essential frameworks to guide your decision:
For immigrants or expats, it’s particularly important to understand the regulatory framework of the country and the industry you’re entering. Ensure the market aligns not only with your skills and experience but also with your long-term goals. Ultimately, ensuring the market aligns with your skills, experience, and long-term goals will set you up for growth and create a strong foundation for a successful business acquisition.
Once you’ve chosen the right market, your next big decision is taking a step back and asking yourself: Is buying the best option for me, or does it make more sense to build my own business? To clarify, this isn’t just about weighing the pros and cons—it’s about ensuring the decision aligns with your long-term goals, risk tolerance, and available resources.
For many, especially immigrants, acquiring an established business might seem like the obvious choice due to the immediate access it provides to customers, cash flow, and operational infrastructure. However, for others, starting a business from scratch may offer more creative control and the opportunity to tailor every aspect of the business to their vision.
In either case, this decision is a pivotal moment in your journey, as both paths come with their own set of challenges and opportunities. Therefore, reflecting on these factors will help you make a choice that sets the stage for a successful venture.
Both options can lead to success, but here’s how they differ:
To make the best decision, use a Pro/Cons Matrix to weigh the benefits and drawbacks of buying versus building, see some examples below (If you need some inspiration for this reflection:
Ask yourself the following questions to clarify whether buying or building is the best choice:
Choosing to buy or build is not just about resources; it’s about what fits your vision and goals. If you’re seeking immediate access to a proven business model and market presence, acquisition may be the right choice. However, if you’re passionate about creating something entirely your own and willing to invest the time and energy, building from scratch could be the perfect path. The key is to think critically about what aligns best with your personal and professional aspirations.
Before you begin your search for potential businesses, it’s essential to define your criteria for what you need. This is your roadmap, guiding you towards businesses that meet your specific goals. Align your criteria with your risk tolerance. For instance, if you’re risk-averse, you may prioritize businesses with strong financial health and a solid customer base. In order to define your risk tolerance, you should build your investor profile. We will write about this in our future articles, so stay tuned!
After defining your criteria, the next step is to build a pipeline of potential acquisition targets. This stage is akin to gathering a list of properties that fit your specifications. The broader your search, the higher your chances of finding the right fit for your needs. However, be mindful of how competitive the market is for these businesses. A wider search may uncover hidden gems or present you with more competition.
Before you proceed with a more in-depth evaluation, it’s important to conduct a preliminary check of the business to ensure it’s worth pursuing. This phase helps you decide whether it’s worth it to move forward with detailed evaluations and due diligence.
Important: If there are risks, red flags, or considerations, no need to immediately eliminate the business from your target risk. You should also consider any potential mitigation plans and how feasible they are in order to assess the risks
Once you’ve decided to move forward with a business, it’s time for a thorough financial analysis. This stage is critical for confirming that the business’s financial health aligns with your expectations and that you’re not taking on unexpected liabilities. This stage is where you check whether the business’s financials match the seller’s claims or previous records, helping to uncover any discrepancies or hidden risks. In order to do this, you should get access to and dive in the key financial statements, i.e. Income statement, Balance Sheet and Cash flow statement of the last 10 years of the business. If you are not familiar with the key financial statements, read this article.
Next to a historical view, the seller should also provide you with a seller’s Business Plan (BP) on how they had foreseen the business to perform in the future, and what investments the business would need to achieve that. The buyer should typically have his/her own critical view of the seller BP, called the buyer BP, which he/she would use as the basis for the valuation of the business. We will dive into this in a future article!
At this stage, you’ll perform a full due diligence review to assess all aspects of the business, including its legal standing, operational systems, technology, and compliance with regulatory requirements. This step is essential to uncover any hidden risks or liabilities before finalizing the acquisition. Different sectors require different focus areas. In real estate, for instance, operational and legal checks might take priority, while in tech, evaluating the company’s IT systems and cybersecurity is crucial.
Once full due diligence is complete, you’re ready to finalize the deal. This involves negotiating the terms, agreeing on the purchase price, and preparing the final purchase agreement. At this stage, it’s advisable to seek legal and financial counsel to ensure everything is in order before the deal is closed.
In this series, we’re focusing on the strategic thinking you need to master before buying any business. These steps are universal and apply to businesses across all geographies, helping you minimize risks, make informed decisions, and set yourself up for success. Whether you’re a first-time buyer or an experienced entrepreneur, following a structured approach ensures you’re prepared for the challenges ahead.
In the upcoming articles, we’ll dive deeper into each of the steps outlined in this guide, offering practical advice and actionable insights to help you navigate the complexities of acquiring a business. From understanding market dynamics to conducting thorough due diligence, we’ll explore every stage of the process in greater detail.
Additionally, we’ll cover the full lifecycle of an M&A deal from the buy side, breaking down each phase and sharing real-world examples to illustrate key concepts. Our goal is to equip you with the tools, strategies, and confidence to approach any acquisition opportunity with clarity and purpose. Stay tuned for the next installment in this series!