Artikel

Acquisitions: Establish a business case

A well-thought-out business case will help you avoid a wrong business acquisition. But what parts should be included?

Build a business case for business acquisitions

Creating a business case for a business acquisitions is an important step aimed at initially analyzing the potential benefits, opportunities, risks and costs of the acquisition. Here is an overview of how a business case can be developed and what essential elements should be included:

1. Executive Summary

Overview: A brief summary of the acquisition opportunity, general points about the target company and recommendations.
Acquisition Rational: The main reasons why the acquisition is strategically and financially advantageous.

2. Strategically Rational

Strategic fit: How the acquisition supports the company's long-term strategic goals and vision.
Synergies: Potential synergies including cost savings and revenue growth, as well as how to realize them.
Market advantages: How the acquisition affects the company's market position, competitiveness and growth opportunities.

3. Description of the target company

Activities: Description of the target company and the main business including customers, suppliers, staff, etc.

4. Financial analysis

Rating: Description of the initial valuation of the target company, valuation methodology and underlying assumptions.
Investment calculation: Expected investment size for the acquisition including purchase price, due diligence, and integration costs.
Financing: How the acquisition will be financed (equity, liabilities, etc.) and the effect on the company's capital structure.

5. Operational analysis

Integratie: Plan for the integration of the company, including timetable and division of responsibilities.
Processes and systems: How operational processes and IT systems should be harmonised.
HR and Culture: Description of staff structure and company culture and how to retain key employees.

6. Risk analysis

Identification of risks: Identification of the most material risks related to the acquisition, such as market risks, operational risks, financial risks and regulatory risks.
Risk management: Strategies for managing and mitigating risks, including contingencies and contingency plans;
Sensitivity analysis: Analysis of the sensitivity of financial assumptions to changes in key variables.

7. Due diligence

Due diligence streams: Comprehensive information on due diligence planned workflows.
Advisers and Costs: Description of the advisors and external competencies needed for due diligence and estimated costs for the work.

8. Timetable

Phase division: Timeline of completion of the acquisition, including material elements.
Integration Plan: Outline plan of how the integration process will be carried out and the degree of integration.

9. Concluding recommendations

Recommendation: Conclusion and recommendation based on the analysis.
Decision Point: Specific decisions that need to be made by management or the board of directors to proceed with the acquisition.

A well-developed business case for a company acquisition provides a clear picture of the strategic, financial and operational benefits and risks of the deal. It serves as a comprehensive decision-making basis for management and ensures that all aspects of the acquisition are carefully considered and planned.

At FLB Partners, we offer expertise and support throughout the acquisition process, from strategic planning to integration. Contact us today to discuss how we can help your company with the acquisition process.