Financiers use ‘pub test’ on potential clients

Jeff Harris, corporate finance partner at PKF, lists whether you would take the owners of a business out for a pint as fourth in his top 10 tips for companies planning an acquisition.

‘There are lots of potential pitfalls but, with the correct preparation, an acquisition can dramatically increase profits and market share,’ said Harris. ‘Just asking the right questions at the right time can make the difference between disaster and success.’ He said that many a deal had been ‘scuppered’ by a personality clash.

Acquiring another company is one of the most common and effective ways of growing a business, but for first-time buyers, it can be a route fraught with difficulties and potential problems.

PKF’s top 10 questions to ask yourself before buying a business include: where the tip-offs are coming from; how a hot target will be recognised; have the sums been checked; who picks up the bill if the deal aborts; how the deal will be structured; ensuring the detail is covered and asking whether buyers are playing safe.

‘If you cannot get the answers you need on issues that are fundamental, be ready to walk away,’ said Harris.

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