How to avoid costly mistakes - take it one step at a time

(NC)-Being one's own boss is an enduring Canadian dream and buying an existing company might offer the best way to realize this dream. Making a business acquisition can be an exciting opportunity - if it goes well. Avoid costly mistakes by following these eight essential steps.

1. Develop and implement an acquisition strategy

It is of paramount importance to establish clear criteria to focus your search and to measure potential targets against. This up-front thinking will save a lot of time and frustration later in the process.

2. Identify suitable targets based on your strategy

Searching for a suitable target is a time consuming project. It is also a sensitive part of the process - showing too much interest too early may "up" the cost you have to pay for an acquisition.

3. Begin discussions with potential targets

Potential targets must be carefully assessed based on your acquisition criteria. Emotional decisions based on a "gut feel" have no place in serious business acquisitions.

4. Arrange for a business valuation of the target

Using the skills of a chartered business valuator, conduct a valuation of the target business.

5. Secure financing

Without proper financing, no business acquisition can move forward successfully.

6. Conduct due diligence

Due diligence will help you ensure that you are buying what you think you are buying.

7. Negotiate, structure and close the deal

Make sure the tax consequences of any deal structure are carefully explored.

8. Plan and implement a post-acquisition strategy

Without proper planning of the post-acquisition strategy, what seemed like a good deal can quickly go sour.

Visit http://www.GrantThornton.ca/resources for more information on how to buy or sell a business. Grant Thornton is a leading Canadian firm of chartered accountants and management consultants with offices across Canada.