Purchase Process

The acquisition of a company is a once-in-a-lifetime experience for most buyers, presenting both rational and emotional challenges. Unlike everyday transactions, this involves your professional future, significant financial investments, and taking on responsibility for an existing business model along with its employees, customers, and suppliers. A structured acquisition process is therefore crucial for success. Taking over an established company offers numerous advantages compared to starting a new business: established customer relationships, well-established processes, and immediate cash flows. However, the path to a successful closing is complex and requires a systematic approach. In this guide, you will learn how the company acquisition unfolds step by step, which phases require special attention, and how to avoid common pitfalls.

Preparation

The acquisition process begins long before the first contact with the seller. The preparation phase is critical for later success. Initially, you need to create your personal requirement profile: Which industry suits you? What company size can and do you want to manage? Where should the company be located geographically? In addition to these fundamental considerations, you should realistically assess your financial capabilities and evaluate various financing options. Especially when deciding whether to start or buy a company, a thorough analysis of your personal situation is worthwhile. The subsequent search phase can take place through various channels: business marketplaces, auditors, M&A advisors, or direct approaches. Keep in mind that many attractive companies are not publicly listed for sale—networking is essential here. Once you have identified interesting candidates, the first contact follows. This initial impression is crucial and should be handled professionally.

Search

The main phase of the acquisition process begins with the first meeting and company visit. Here, you get a feel for the business and its owner. Pay attention not only to hard factors such as numbers and data but also to soft factors like corporate culture and team morale. If mutual interest is confirmed, preliminary negotiations will discuss initial key points, and often a Letter of Intent (LOI) is signed. This phase serves to establish a basic understanding of the potential deal without fixing all details. After signing a confidentiality agreement, the due diligence follows—a thorough examination of the company inside out. This includes financial, legal, tax, technical, and commercial aspects and forms the basis for the final purchase price negotiation. The negotiation strategies should be well thought out, as this phase determines whether the transaction will proceed on your terms.

Negotiation

The closing phase begins with drafting the purchase agreement by specialized attorneys. This contract regulates not only the purchase price and payment terms but also warranties, guarantees, and possible earn-out arrangements. After signing the purchase agreement (Signing), there is often a transition period until the actual transfer (Closing), during which regulatory approvals are obtained or conditions fulfilled. With the Closing, the actual acquisition process is completed, and the equally important phase of business integration begins. Thoughtful communication with employees, customers, and suppliers is crucial here to maintain trust and ensure a smooth transition. The first 100 days after the takeover are considered a critical phase in which you, as the new owner, implement your strategy without jeopardizing the existing business.

Specifics and Challenges in the Acquisition Process

Every company acquisition is unique and brings specific challenges. The takeover of a family business, for example, requires particular sensitivity to emotional and traditional aspects. In a GmbH acquisition, corporate law issues play a larger role than in the purchase of a sole proprietorship. Industry-specific differences must also be considered: while the acquisition of an IT company focuses on intellectual property and employee retention, a manufacturing company places more emphasis on fixed assets and supply chains. Regardless of the type of company, involving experienced advisors is a key success factor. M&A advisors support you not only with company valuation and negotiation but also in identifying hidden risks. Tax advisors, auditors, and specialized attorneys complement the expert team as needed. A particular challenge is the financing of the purchase price. In addition to traditional bank loans, funding programs, mezzanine capital, or partial seller financing may be considered. Early and comprehensive planning of the financing structure significantly increases the chances of success and provides you as the buyer with flexibility in negotiations.