North Carolina entrepreneurs might dream of coming up with the next great profitable idea, but success more often lies in acquiring an existing business and taking it to new heights. The purchase of an existing business allows someone to tap into an operation that has already proven its concept to some extent. It has built a customer or subscriber base and achieved a financial track record. An existing business also provides the new owner with an established supply and distribution network.
The acquisition of a business that already possesses a foundation could give a buyer the opportunity to scale the concept. People who already own one or more businesses sometimes buy other companies to expand their operations. Instead of building a new product or service in-house, the owner buys a business that has the infrastructure in place to serve the desire for expansion. For example, Airbnb bought an event-booking platform based in Denmark when it chose to pursue the business of renting space for commercial or private events.
Historically, the desire to acquire technology or logistical assets drove many purchases. Although this remains a motivation, business people have discovered the potential of acquisitions to meet their diversification goals. A measurement of merger and acquisition trends in 2019 by Deloitte identified diversification as the primary motivation for business purchases.
Before entering into this type of a transaction, a potential buyer must perform thorough due diligence on the target company. In addition, a decision must be made between buying the assets of the potential acquisition and purchasing its shares from the owner. When considering buying a business, it is often advisable to have the assistance of an attorney who has experience with these matters.