Business exit planning advisors Andrea Brady and Denise Hozza were quoted in a recent Lehigh Valley Business article about how not to overpay for a business acquisition. Brady, a Concannon Miller shareholder, is a Certified Exit Planning Advisor and Hozza, a Concannon Miller director, is a Certified Valuation Analyst. Check out their insight and advice below:
Several factors come into play that could steer a hopeful business owner into overpaying for an acquisition.
According to experts in accounting, banking and law, the pitfalls generally include a lack of due diligence, failure to complete a buyer’s valuation or even forming an emotional attachment to a potentially detrimental deal. Buyers should surround themselves with a team of experts to allow them to gather as much information about a target company and to uncover any red flags.
“It’s not just the financials,” said Andrea Lee Brady, a CPA and shareholder with Concannon Miller in Bethlehem. “It’s how the business is run and what sets the tone at the top of the company.”
Brady has seen clients start their acquisition process with a broker or banker before performing due diligence. The result could be unintended consequences or issues resulting in buyer’s remorse.
Along with due diligence buyers want to have a valuation report done, which results in a detailed value. Denise Hozza, a CPA and director with Concannon Miller, explained that a valuation report provides an overview of a company’s operations, history, management and industry, among other things. Most are summary reports, she said, as a full report is costly and usually done for IRS purposes.
Read the full article here: How much would you pay? Tips to avoid overestimating value in an acquisition
