The start of 2026 is proving to be economically challenging. Global economic disruptions are affecting production costs, declining consumer purchasing power, and a volatile stock market… amid this chaos, some companies have the capital and internal talent to pivot and adapt, while others are reaching the end of their rope. Moreover, in a context of an aging population, we are currently facing a generation of entrepreneurs and owners of small family-run businesses who are retiring and must prepare to hand over their businesses to a new generation.
During economic shocks, some companies have no choice but to close, but this situation also presents potential opportunities. For businesses with capital, there is instead potential to create new partnerships. In this article, we discuss what businesses need to know before proceeding with such a collaboration.
Why Acquire a Business?
Whether you are a business with capital to invest or an owner heading toward retirement, the option to acquire a business should not be taken lightly. A business acquisition should always begin with serious discussions about the company’s long-term goals.
Acquiring another company’s tangible and intangible assets fundamentally changes a business’s DNA. This typically involves adding new teams of employees, established methods and approaches that are difficult to change, and numerous new costs. For the acquired company, this typically results in a loss of autonomy, which can affect both internal production methods and the company’s objectives.
Despite this, the benefits of an acquisition are clear. A company can use an acquisition to enter a new field or to enhance its service offering through the expertise of an established company. An acquisition also allows companies to combine their strengths while centralizing management, leading to increased long-term efficiency.
Our List of Questions for You
Our business law attorneys have worked with numerous companies (typically SMEs and family-owned businesses) to facilitate their acquisitions. When clients approach us early in their acquisition process, we have several questions for them to help them make the best strategic and financial decisions regarding their acquisition.
- Why do you want to acquire a company? Why this one in particular?
- What are the expectations and objectives following the acquisition? Do you have a well-thought-out plan to achieve your expectations and objectives?
- Do you have the internal resources to carry out a business acquisition? Do you have employees with experience in company valuation, negotiation, due diligence, or financial analysis? Do you have employees to oversee the integration of the new company once the acquisition is complete?
- Is the acquisition “really” necessary? Is the acquisition vital to your survival, or an opportunity you cannot pass up?
- Why do you want to buy this company? Is it to gain access to its employees, customers, technology, or intellectual property? Is it a good trade-off for the cost?
- Will the existing contracts of the acquired company be modified or maintained?
- Is this a vertical or horizontal integration of the new company?
- Who will be your team of external experts to support you throughout the process? (Business lawyer? Accountants? Brokers? Bankers? Etc.)
Acquiring a company is a long and complex process that fundamentally changes the “foundations” of your business. You must allocate time and resources—both internal and from external experts—to plan and manage the acquisition. A poorly planned acquisition can ruin a company just as easily as it can help it reach new heights.
As external advisors, our business lawyers cannot make these decisions for you. However, a specialized lawyer provides you with a careful outside perspective, helps you avoid issues regarding the other company’s shortcomings, and ensures you complete the process with a solid contract that benefits everyone.
The Steps of a Business Acquisition
Although we explored this topic from the seller’s perspective in our article on successfully selling your business, acquiring a company is a complex process that requires great rigour. A business law specialist can help you properly navigate all the crucial steps of your business acquisition, secure your investment, and prevent future disputes through robust contractual structures.
1. Preparation and putting the business up for sale
Before approaching the market, the seller must “get their affairs in order.” The seller will typically conduct a diagnostic assessment of their business and an evaluation of its market value.
2. Signing a confidentiality agreement
When a business for sale finds a potential buyer, even before negotiations begin, the buyer is bound (as is the seller, in some cases) by confidentiality (formalized in a clause). Leaking information about the intention to sell can indeed have serious consequences for the owner.
3. Sales Negotiations
The potential buyer then enters into negotiations with the seller. The negotiations gradually take shape, as appropriate, before addressing certain sensitive issues regarding the business—including price and terms of sale.
4. The Letter of Intent to Purchase or Purchase Offer
Through this document—which does not constitute a formal commitment—the prospective buyer affirms their intention to purchase the business from the “seller.” Included in this letter are the means of purchase (assets or shares), prices, terms of acquisition, the issuance of a due diligence reservation, etc.
At this stage, the letter of intent takes the form of a purchase offer, which is formal in nature in that it establishes a contract binding both parties.
5. Due Diligence
The business being sold (or purchased) must be free of defects, and this is where due diligence comes into play. Thus, all critical details of the business will be scrutinized to verify their compliance with the information provided earlier by the selling entrepreneur. It will also involve ensuring that the business is up to date financially, legally, and tax-wise.
6. Closing the Business Sale
The closing of the sale and purchase leads to the signing of the contract and brings this lengthy process to an end. This sale/purchase agreement is highly sensitive and must be drafted as expertly as possible.
Such a contract typically includes warranties regarding the good condition of the acquired business, price adjustment clauses, protective mechanisms where necessary, and much more. The details of each contract vary depending on the specific financial and operational circumstances of the businesses involved.
A Corporate Lawyer for Your Business Acquisition
At Sabbagh & Associates, our approach is grounded in our extensive experience with previous clients. Our corporate lawyers assist you in financing your company’s mergers and acquisitions, facilitate dialogue between the parties, and help negotiate and draft the contracts necessary to bring these major projects to a successful conclusion for all parties.