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.
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