Acquiring another company can be a long, tedious, and often confusing process for even the most seasoned business owners. There are just too many variables to take into account numbers to crunch.
At the end of the day, though, if everything works out, business acquisitions are a great way to supercharge your company’s growth, thanks to the increased operational capability, extra manpower, additional funding, bigger customer base, and new revenue streams they bring.
When things go wrong, however, they can quickly put your business in a really bad spot.
Take the US company Chuck E. Cheese’s, for example. They filed for bankruptcy in 2020, which, at first glance, may seem like it was due to the global pandemic. But when you take a closer look, you begin to realise that that was not the case.
You see, over the last couple of decades, Chuck E. Cheese’s has been busy acquiring companies left and right, which would have been a solid strategy had the companies they’ve been acquiring not been in serious debt.
Unfortunately, these companies were, in fact, drowning in a billion US dollars worth of total debt, which Chuck E. Cheese’s had to assume as the new owner—while only making $50 million a year.
Obviously, these acquisitions were clearly a bad idea. However, for some reason, the company decided to proceed anyway, leaving itself literally unable to pay the price.
Don’t let this happen to your business. If you’re thinking of acquiring another company, let our NZ business acquisitions specialists here at Orb360 crunch the numbers, analyse all the variables, and do all the necessary projections for you first so you can gauge whether or not you should proceed.
The last thing you want is to invest a lot of time and money in acquiring a company only for it to turn out to be a serious financial burden for your business later on, right?
Book a quick chat with us today so you can get the proper guidance before you make your move.