Key Questions to Ask When Ordering Arcade Coin Changer Supplier

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Acquiring a business requires time, effort, and money. An acquisition can transform and grow a business overnight. But purchasing the wrong target company wastes time and resources, and causes distractions. Every acquirer must analyze, investigate, and perform due diligence to ensure that doesn't happen.

The entire process of buying a business can be daunting. However, with the proper research and attention to detail, an acquisition can lead a business to successful growth. To help acquirers, we have included 55 questions to ask when buying a business. We have separated it into categories and phases.

Business Readiness Questions

Before asking questions to the seller or target company, ask the following questions:

1. Why buy the business?

What is the goal of the acquisition? Is the acquisition’s purpose to acquire specific technology or enter into a new market? A good deal rationale will set the tone for everything else.

2. Why not build internally?

Why buy the product or service instead of building it from scratch? Is it more expensive to build from scratch? Is it because of time-to-market? A buy-or-build analysis is crucial when deciding to acquire a company, which requires collaboration with the CEO and functional heads.

3. Is the acquisition affordable?

Funding an acquisition can be tricky, depending on the acquirer’s financial capability. There are three ways to fund a transaction: equity financing, debt financing, and cash reserves.

1. The simplest is cash reserves, paying the entire deal with excess money in the balance sheet.
2. Equity financing is the act of raising money by exchanging equity. This method is risky, as losing too much equity might affect ownership.
3. Debt financing is raising money from lenders and repaying them later, typically with interest. Debt financing is harder to obtain and will depend on the consolidated debt capacity of the company.

4. Can the team’s resources handle M&A?

M&A is massive and will require many people to execute the entire process. Not to mention that it could take months and, in some instances, a year to finish. Also, the people involved in the transaction will most likely juggle their day job while participating in the deal. Dedicated and capable people is a requirement for any company to execute M&A.

5. Where to find third-party consultants?

Aside from the internal team, getting outside help has its benefits, and is sometimes necessary. It is important to understand where to find third-party consultants and the costs associated with hiring them.

6. Is there a culture fit?

It's never too early to do a cultural assessment of the target company. Even at a high-level view, massive differences will be noticeable. For instance, a traditional company trying to acquire a millennial-dominated startup might have problems due to a substantial generational gap. Further diligence is required.

7. Is this the best target company available right now?

Are there any other alternative targets? Look around, it doesn't hurt to ask.

Questions about the Business’s History

Now it's time to approach the target company and ask a few questions. Before fully committing all efforts and resources, obtain a high-level view of the company and get to know the seller.

8. Why sell the business?

There are several reasons why business owners sell their companies, and some of them can be deal-killers. Knowing why a business is being sold upfront can give buyers confidence or the ability to walk away as soon as possible.

9. When did the business start?

Longevity is a good indicator of business success. The longer the business has existed, the safer it is to purchase. Chances are, they have good customer loyalty, a solid reputation, and overall stability. However, startups are often less expensive and have more potential. Business duration is a good starting indicator of the business’s quality.

10. Are there any other investors or owners?

Is the seller the 100% owner of the business? Or do they have capital investors? Are they selling their shares too? How much of the company is for sale?

11. Was there ever a lawsuit against the business or the owner?

In the business world, past or present litigation matters. It’s a good indicator of culture, values, and, most importantly, reputation. Also, litigation can open the acquirer up for liabilities. If the target company has legal problems, the buyer will inherit those problems as the new owner.

Future Business Growth Capabilities

What about the future of the business? Has the business maxed out its potential? Or can the company grow with extra help? Those are important questions during an acquisition.

12. Does the business have the potential for hypergrowth?

Often, acquirers make the mistake of ignoring opinions and the owner's vision regarding their business. But the fact is, no one knows the company more than the owner does. If they are one step away from achieving hypergrowth, they might know what to do, but just lack the capabilities or funding to achieve it.

13. Is the business too dependent on the current owner?

A business heavily dependent on the owner could cause problems, especially if they are retiring. That massively cuts the value of the company, even though the owner may not see it that way. Also, putting all hopes on one person that could walk away anytime is not a good idea. If it seems impossible to replicate the owner's role or automate the processes, think twice about buying the business.

14. Is there someone who could run the business?

It's time to find a deal sponsor; Someone who can inherit the business forward. If the business is not dependent on the current owner, find a suitable replacement that can handle the business and its day-to-day operations. The location of the business is also crucial. If the business is overseas, and there is no willing employees to move there, that could be a problem.