A company looking to acquire another company will spot an opportunity from within its own sector as word gets around of a vendors desire to sell.
However, when there are no obvious targets to approach, desktop research may be required to identify potential vendors. Whilst the internet may offer a good start in any search process, company databases utilised by accountants and business advisors add a little more depth.
What to look for in a target company
The basic parameters for an acquisition search will be set by the shareholders of the acquiring business.
These may include desired geographic location, turnover range, profitability ratios and product offering.
Following this though, there may be certain other characteristics that may make a vendor ready to sell. Such factors include the age of the current shareholders or certain sector influences like changes in legislation that may make a business owner think twice about carrying on.