Before you begin an acquisition, you need to understand the risks involved. Failure to recognize these risks can cause a good business deal to go bad overnight and leave you in a financial whirlwind. 

The risks associated with an acquisition can be mitigated when you have a clear vision of what you want to achieve and when you adopt a clear and concise strategy for making the acquisition happen successfully. 

As you consider acquiring an automotive business, you may want to ask yourself a few clarifying questions:

  • What will the impact be for you and your family financially? 

  • What is your long-term vision for the company?

  • Do you have the time to run the business?

  • Are the current staffing levels adequate? 

  • What is the condition of the property and equipment? 

  • How can you increase the customer base?

These baseline questions will help you identify the risks associated with an acquisition. 

Identifying Risks in an Acquisition

If you can identify potential risks in an acquisition, you can develop a strategy for minimizing them. 

Some of the more common risks include:

  • The business taking more time to run than you thought

  • Potentially losing employees during the transition

  • Declines in Sales and Profits 

  • Equipment or property breakdown 

Let's dig into the details!

The Business Taking More Time Than You Thought

You can have the best analysis in the world, but until you've stepped into the shoes and gone behind the scenes for your purchase, you really do not know how much time the business will require to run it efficiently. It always takes more time and more money, and that's just the way it is. 

Small things can pop up that you weren't expecting, which can take longer to resolve and directly affect your revenue, so always overestimate needs to help reduce the risk.

Potentially Losing Employees During the Transition

Financial loss in business often stems from inadequate planning and hasty expansion. Your employees, too, play a crucial role. A poorly planned acquisition can disrupt operations and increase employee turnover. 

However, you can feel more in control of these situations by ensuring you take the time to make your employees feel comfortable in their roles and with the new leadership. While there's no way to completely plan for employee satisfaction or retention, you can make every effort to ensure employees feel as comfortable as possible. 

Equipment or Property Breakdown 

Equipment breakdowns can be a significant setback for any business. Whether caused by improper use or neglect, these issues can disrupt operations. To avoid such situations, always take the time to inspect any equipment you plan on investing in. 

Additionally, having a reserve of funds for emergencies can provide security, knowing you have a safety net.

Declines in Profits & Sales

Recessions and declines in economic stability happen, and they may affect your business's profits and sales. They can spur bankruptcies, curb credit access, and even slow collections, creating hardships that can be challenging to overcome. 

While you can't predict if this will happen, always leave room for innovation and change so you can get through any problems that need to be solved and prioritize customers by offering attractive cost-saving options to boost the business. 

Are You Ready to Buy (or Sell) an Automotive Business?

If you're ready to discuss buying an automotive business or car wash, contact AutoCenter Sales for a free, no-obligation consultation. 

If you would like access to immediate auto centers on the market or car washes for sale, fill out our Priority Buyer form today! We look forward to assisting you in the purchase of your business!