Acquisition of Establishment Ventures

Introduction :
What is Acquisition Of Establishment Ventures?
Acquisition of established venture is where one company purchases another
company and the acquiring company purchases the target company assets with an
intent of adding the acquired venture to its business portfolio .
The process of acquisition .

Identification of goals and objective’s by researching on the target company

Detailed research of the potential targets

Preparation of the transaction process

Analyzing the venture and approaching the target market by looking at the available
executable opportunities.

Evaluation, conciliation and drafting of the letter of intent
 Continuation of the process of Acquisition

Due diligence where the investment banker collaborates with the venture
advisors .
The Process of drafting contracts and other transaction materials required.
Funding the operation by putting in place the required amounts of funds.
Closure of the acquisition process.
 Acquiring an Established Venture

Substitutes lower risks compared to starting a venture from scratch.

The trading process can start immediately since the customer base is already established.

The acquisition process is time consuming

There is a need to examine:

 Business history and records
 Previous operations and plans
 Transferrable documents such as licenses and permits
 Industry standards and competitors
  
Evaluating an Established Venture
Financial and income statements such as profit and loss statements over the last 3 years
Records of cash deposits
Previous letters of credit and bank loans
Previous records of management meetings
Accounts receivable and payable records
Available stock

Number of employees, customers and trading partners

Business intellectual assets such as patents
The condition of the business properties such as fixtures
Existing staff contracts  
 Why To Prefer Acquisitions
Acquisition leads to:
• Improved cost structure as a result of improving efficiencies and rationalizing
underutilized business assets.
• Increased cash flows since costs and revenue synergies are leveraged

• Decreased level of risk as a result of greater diversification of stocks increasing return.

• Higher valuation level by increasing on the multiples on which cash flows are valued.
 Advantages of Acquisition of Establishment Ventures

Increased profits. Reduced risk failure.

Improved customer service .
 New opportunities for growth.
Improved brand recognition.
Increased access capital Reduced risk.
Improved chances for success .
Financial history.
Access to skilled employees Lower costs.
 Disadvantages of Acquisition of Establishment Ventures

Increased risk.
Greater difficulty scaling up .
Increased competition .
Increased costs.
Reduced profitability.
 Tips To Note Before Acquiring An Established Venture

The method of entry to the market to operate in.

The kind of markets to enter.

Considerations on how customers were previously dealt with .

The strategies and measures to put in place in order to retain existing customers.

The location of the business.

The period of time to enter in the market and on what scale .

The degree of competition in the market .

 Examples Of Biggest Acquisitions
Walmart acquires Flipkart.

Mannesmann AG being Acquired by Vodafone company

Time warner was Acquired by American Online company

Verizon communication acquires Verizon Wireless from Vodafone

Dow chemical Acquires Dupon.

SABMiller being acquired by Anheuser-Busch InBev

Vodafone acquires Essar’s Company.

 Conclusion
Acquiring an already established venture is a very admirable strategy than starting
your own business from scratch, but it is important to be prepared for the process by
understanding the necessary resources and teams to work with.
The overriding consideration should always be how best to achieve the strategic
goals of the acquiring company. This will vary depending on the target industry
sector and the target business's specific characteristics since different industries uses
different operation mechanisms.
A well-executed acquisition will benefit the business substantially since the
acquiring company gets an established business with valuable resources and skills
giving it a competitive edge for the business to thrive in the market.