Successful business expansion through acquisition involves a substantial amount of creativity and diligence to ensure the proper processes have been performed. Unlike a joint venture where a new entity is created with the contribution of assets by two or more separate entities, business acquisition involves the acquisition of tangible and intangible assets, liabilities and business of an existing company. Therefore, a thorough understanding of the existing company background and business practices is required. Foreign investors should look to avoid buying into the target company’s liabilities and other problems, and equally the target company should ensure that the investors are reliable.
Our role is to interact with both the buyer and seller to achieve the synergy and benefits characteristic of the asset acquisition. In that context, we would carefully weigh various factors on both sides:
Benefits to Target Company
- Improved financial position and
additional working capital
- Access to new capital markets
- Access to new technology
- Increased distribution channels
- Greater market access and
- Talent and human capital
- New management system
Benefits to Target Investor
- Availability of financial statements
- Immediate return on investment
- Established goodwill and brand name
- Established suppliers and distributors
- Proven products and sales network
- Experienced management and staff
- Eliminates time cost and energy of
starting a new business
First Asia follows a unique and rigorous screening process in order to match the right investment funding with the right target company, and maximize the benefits to both the target company and investor. The key steps include:
- Project Assessment
Why buy a business rather than start a new one?
What are the expected results of the combined business?
- Identification of Target Company / Investor
What characteristics are expected of the target company, and of the target investor?
- Selection of Investment Strategy
How much cash is required to be raised?
Where in the business and when can funds be accessed?
- Valuation and Pricing
How is the value of the business assessed?
Valuation methods to be used?
- Negotiation of Deal Structure
Striking the best possible deal for the client on terms fair to both parties.
- Deal Execution
Involving all relevant parties and bringing the deal to a successful completion.