For a company interested in an acquisition, their goals should be first to find a company that is financially stable. Businesses that are able to successfully close deals have strong cash positions and little to no debt.
The Right About of Working Capital
Working capital should be positive and at or above the industry norm. Have your sources of cash ready to go before beginning the acquisition process. A strong balance sheet with a solid amount of cash is very helpful, but an acquirer does not necessarily have to use its own money to fund 100 percent of a deal.
Depending upon the acquirer’s situation, a line of credit from a bank or a private equity fund may be able to help with financing. Although you do not have to have a private equity fund as a financial partner to make an acquisition, failure to line up your sources of financing ahead of time might lead to an inability to close the deal.
Want to learn more about getting ready for the M&A process or finding buyers and sellers in the M&A market? Contact George & Company.
Interested in mergers and acquisitions, or our intermediary services?
Request your complimentary and confidential exploratory conversation today.