Part Aquisition of a Business
Discussion
I'm looking to expand the business, the question is not of funding, but whether it is viable to offer to buy the core part of a business when they have split into 2 separate sections.
For instance (and this is just a made up example)...
If you local bakery, been in business since 1970 bought the butchers next door and was running them both with the same management for a few years but then decided to give each a separate management team (as the business is separate), would it be feasible to offer to buy the Bakery part of the business once the split is made?
Is it right to assume that it has been split to make each part more suited to being purchased, rather that a mash of 2 distincly different businesses in one package?
For instance (and this is just a made up example)...
If you local bakery, been in business since 1970 bought the butchers next door and was running them both with the same management for a few years but then decided to give each a separate management team (as the business is separate), would it be feasible to offer to buy the Bakery part of the business once the split is made?
Is it right to assume that it has been split to make each part more suited to being purchased, rather that a mash of 2 distincly different businesses in one package?
oilydan said:
I'm looking to expand the business, the question is not of funding, but whether it is viable to offer to buy the core part of a business when they have split into 2 separate sections.
For instance (and this is just a made up example)...
If you local bakery, been in business since 1970 bought the butchers next door and was running them both with the same management for a few years but then decided to give each a separate management team (as the business is separate), would it be feasible to offer to buy the Bakery part of the business once the split is made?
Is it right to assume that it has been split to make each part more suited to being purchased, rather that a mash of 2 distincly different businesses in one package?
Of course it is [possible to hive off part of a business - and then sell it on to new owners. These types of situations are fairly common in business.For instance (and this is just a made up example)...
If you local bakery, been in business since 1970 bought the butchers next door and was running them both with the same management for a few years but then decided to give each a separate management team (as the business is separate), would it be feasible to offer to buy the Bakery part of the business once the split is made?
Is it right to assume that it has been split to make each part more suited to being purchased, rather that a mash of 2 distincly different businesses in one package?
Whether the business to be sold has been tidied up before sale will be dependent on lots of issues - the possibility of doing this, competence of existing owner/management, geographical and physical location of the combined businesses, situation regarding business loand or overdrafts of the business and any charges held by lenders over the business assets etc.
Eric Mc said:
oilydan said:
I'm looking to expand the business, the question is not of funding, but whether it is viable to offer to buy the core part of a business when they have split into 2 separate sections.
For instance (and this is just a made up example)...
If you local bakery, been in business since 1970 bought the butchers next door and was running them both with the same management for a few years but then decided to give each a separate management team (as the business is separate), would it be feasible to offer to buy the Bakery part of the business once the split is made?
Is it right to assume that it has been split to make each part more suited to being purchased, rather that a mash of 2 distincly different businesses in one package?
Of course it is [possible to hive off part of a business - and then sell it on to new owners. These types of situations are fairly common in business.For instance (and this is just a made up example)...
If you local bakery, been in business since 1970 bought the butchers next door and was running them both with the same management for a few years but then decided to give each a separate management team (as the business is separate), would it be feasible to offer to buy the Bakery part of the business once the split is made?
Is it right to assume that it has been split to make each part more suited to being purchased, rather that a mash of 2 distincly different businesses in one package?
Whether the business to be sold has been tidied up before sale will be dependent on lots of issues - the possibility of doing this, competence of existing owner/management, geographical and physical location of the combined businesses, situation regarding business loand or overdrafts of the business and any charges held by lenders over the business assets etc.
oilydan said:
Eric Mc said:
Do they want to sell?
Everything is for sale...isn't it? 
If you are chasing what you consider their core business, that is probably the bit they would be less likely to want to get rid of. Even if they were to suggest that they were open to offers, you would have to judge whether the asking price they were suggesting was feasible for you or worth it in respect of the viability of the busienss once you took it over.
oilydan said:
If a business divides into 2 separate business units, how feasible would it be to purchase one of these?
The 2 units are distinctly separate businesses but the one of interest is their oldest, core business.
Revenue of each at around $300 million.
Is this a listed company you're talking about? If so, depending upon how strongly the market values the combined businesses, it might be better to launch a takeover bid for the whole business, whilst simultaneously lining up a trade buyer for the part you don't want. That might still be a good bet on a private basis.The 2 units are distinctly separate businesses but the one of interest is their oldest, core business.
Revenue of each at around $300 million.
If that isn't what you seek, then much will depend upon whether current owners / shareholders / managers view the "old" business as core or not. Many businesses, for instance, expand in new directions (by acquisition or otherwise), feeling they've somehow "outgrown" their original business. In such circumstances, an approach to buy the original business can be welcome, as it provides new funds to enable them to continue to grow by acquisition in new directions.
In the wider sense, almost everything in business is "feasible". Whether it happens, whether any deal available is financially attractive for the prospective purchaser, and whether the mechanics of the deal are one of any number of alternative options, is entirely down to individual circumstances.
Before you go any further, eveybody involved - from the potential sellers to your potential advisers - will want to know whether you have the money to do any sort of a deal. If the current owners / managers have any scruples as to the welfare of their staff, they should also want to know whether you have the money and the expertise to do anything other than run your new purchase into the ground, especially in the current climate.
In your shoes I would probably want a competent advisor who I could trust. Eric is almost certainly the man to recommend you somebody although, depending upon the sector, I may be able to recommend some other candidates.
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