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What qualities make for an attractive potential acquisition?

When two companies combine into one through a merger or acquisition, both entities can experience a surge in growth and enterprise. While not every merger or acquisition is friendly, it is often the case that a company in New Jersey may actively seek to be acquired by another company in its pursuit of business success. What types of qualities make a company an attractive prospect for an acquisition?

First of all, lets look at revenue. Simply earning a high revenue may not be enough. Companies seeking to acquire another company will examine the risks the current stream of revenue faces as well as it's potential for expansion, for example, through regular renewals by clients.

Second of all, attractive businesses have processes and systems in place already that aim to grow the business without having to be totally dependent on any one person for the business's continued growth and success. If only one person is spearheading the business, this may impede the business's ability to grow.

Finally, companies seeking to acquire other companies will want to know why clients are choosing to work with that company. What issues are clients turning to them to resolve within their applicable markets? If a company can answer this question, it allows potential acquirers to determine if their own customers would be attracted to the company's offerings. Moreover, it is important to make sure that revenue is being spent on the issues important to their clients.

While these tips are important, they cannot guarantee any specific result when it comes to a business acquisition. Businesses wishing to be acquired by another company may be well served to consult an attorney for further advice.

Source: Forbes, "How To Attract A Merger, Or Acquisition," Ian Altman, July 14, 2015

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