How to Make Acquisitions in a Down Economy
Investigate the current market value of the asset under consideration., Project the future movement of that market value., Consider any assets that may be included in the acquisition., Identify any liabilities that may be connected with the...
Step-by-Step Guide
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Step 1: Investigate the current market value of the asset under consideration.
This may or may not be the same as the asking price for the asset.
Before making a commitment, you want to know how much you could sell the asset for in today's less than desirable economy and compare that amount to the seller's price.
If the 2 figures are somewhat close, further consideration of the acquisition may be worthwhile. -
Step 2: Project the future movement of that market value.
Depending on the nature of the asset and how the economy is affecting the value of that asset, there is a chance that the market value will either increase or decrease over the next year or so.
Look beyond this short-term shift in value, and attempt to determine what the asset will be worth several years from now, taking into consideration all known economic factors.
This will give you some idea if the acquisition will ultimately generate profits or will end up posting a loss that could undermine the ability to hang on to your other assets. , If the purchase involves buying a company, determine if some of the holdings of the business could be immediately sold after the acquisition to offset the cost of purchase without harming the core operation and its ability to generate revenue. , Should that company currently owe debts that would be transferred to you in the event that the acquisition take place, make sure that debt would not be enough to cripple your current financial status. , Even if the projected risk is somewhat low, you still want to acquire the asset for the best possible price.
Make a counter offer that is slightly below current market value and continue to incrementally raise that amount until a price is reached that both the buyer and seller can agree upon. -
Step 3: Consider any assets that may be included in the acquisition.
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Step 4: Identify any liabilities that may be connected with the acquisition.
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Step 5: Negotiate the asking price based on the information you've collected.
Detailed Guide
This may or may not be the same as the asking price for the asset.
Before making a commitment, you want to know how much you could sell the asset for in today's less than desirable economy and compare that amount to the seller's price.
If the 2 figures are somewhat close, further consideration of the acquisition may be worthwhile.
Depending on the nature of the asset and how the economy is affecting the value of that asset, there is a chance that the market value will either increase or decrease over the next year or so.
Look beyond this short-term shift in value, and attempt to determine what the asset will be worth several years from now, taking into consideration all known economic factors.
This will give you some idea if the acquisition will ultimately generate profits or will end up posting a loss that could undermine the ability to hang on to your other assets. , If the purchase involves buying a company, determine if some of the holdings of the business could be immediately sold after the acquisition to offset the cost of purchase without harming the core operation and its ability to generate revenue. , Should that company currently owe debts that would be transferred to you in the event that the acquisition take place, make sure that debt would not be enough to cripple your current financial status. , Even if the projected risk is somewhat low, you still want to acquire the asset for the best possible price.
Make a counter offer that is slightly below current market value and continue to incrementally raise that amount until a price is reached that both the buyer and seller can agree upon.
About the Author
Judy Alvarez
Creates helpful guides on crafts to inspire and educate readers.
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