Acquiring a company a long way from home

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January 14, 2022

by a searcher in Chicago, IL, USA

If we are targeting a large region surrounding the home state in which we are operating, and a better deal is in a neighboring state, what should we take into consideration when making an acquisition in that state? Obviously different laws & regulations and longer travel from home, but what else is important to pay attention to?

I'd love to hear from anybody with prior experience on this, thanks!

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Reply by a searcher
from University of Pennsylvania in Dubai - United Arab Emirates
The critical matter to take into account in management control/execution oversight. The past 2 years have taught us that physical presence is not needed if the right systems and processes are in place. No matter what however you should plan to spend significant time on the ground for 4-6 months post acquisition. In my experience "significant time" means 3-4 days a week 2 weeks a month assuming there is someone solid who manages the day to day operations. if that resource is not there then plan on 3-4 weeks on the ground until that resource is in place or you have the tools and processes to manage more remotely. this will allow you time to get to know the team, understand the details of the operations and implement the necessary systems. another consideration is company specific: what needs to be done to achieve your value creation plan? if it will require significant hand-on engagement which can only be effective on the ground with the company then you need to up the presence requirement.
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Reply by a searcher
from Western Michigan University in Grand Rapids, MI, USA
It is not uncommon for a business to be acquired by a buyer in another state, time zone, or country. The answer to your question though is that it depends on what role the buyer is going to have in the business.

If you are going to one that is responsible for supervising the operations of the business, not being on site a majority of the time is likely to cause problems. If there is going to be a manager or management team that runs the business, then it likely doesn't matter how often you are there.

I think it is also important to know your own personality as well. If you are someone who wants to be hands-on with the business that should sway your decision. But if you are a delegator and prefer others to execute on your vision that can open up your search.

As for local laws, there are experts in every area you can think of. Even the massive businesses out there will hire local experts for legal and tax matters.
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