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How to Write a Business Plan for an Acquisition

BREAKING DOWN 'Buyout'

❶Look for a company where you can leverage your background or the background of your team. Include complete financial statements for your original business and acquired business, for the past three years, to support and justify your forecasts.

How to Acquire a Company Using a Leverage Buyout

What is a 'Buyout'
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Explain the steps that your business will use to control its losses and increase its assets. Identify the external threats and opportunities that accompany the business acquisition. Look at areas such as customer demands, government regulation and industry competition. Research the identified areas thoroughly. Develop strategies to overcome the threats that accompany the acquisition and ascertain how your company will take advantage of its underlying opportunities.

Identify the products and services that your business will focus on after the acquisition. Categorize the original products and services against the newly acquired ones. Show and explain the costs and procedures of implementing the change requirements and merging the businesses. Identify any newly created products that result from the merge of company resources and identify any new equipment or inventory that will be required. Identify the target market for your business.

Explain how this market has changed as a result of the acquisition. Differentiate the market by separating it into categories of original, acquired and new markets. Address each category separately. Ascertain how your business will maintain its original customer base, and welcome its acquired and new customers. Create financial statements for your business acquisition. Include personal financial statements for each owner of the business.

This article includes what is included in the LBO business plan and how it should be structured. Building a small web design agency as a freelancer can often be relatively simple, but scaling it outside your local area and on a national level is challenging. You need to establish a strong brand, reputation for managing clients, and have an operations structure that helps you remain profitable as your scale. These unique factors will depend upon your acquisition strategy, synergies, and be reflected in the financial projections that you set forth to achieve.

In many cases, acquiring a company at a premium is not profitable in itself. Therefore, clearly communicating the added value that acquiring the company will create is the fundamental objective of the LBO business plan. The acquisition strategy of the leveraged buyout business plan is designed to communicate how you will increase the profitability of the company. For instance, some companies target those that have considerable operating efficiencies, whereas others target healthy companies that they can add value through the introduction of synergies.

The acquisition strategy of the company demonstrates to the bank that the company will increase its cash flows within the short-term future, in turn, reducing its risk level or increase its profitability. A struggling company with a strong reputation in your field of expertise also can be a target for acquisition -- as long as you have the capital to pay off its debts in addition to paying the other costs of acquisition. Look for companies that have strong track records of generating cash but have encountered short-term problems your management team could overcome.

New companies without established cash flow are not good targets for buyouts. Assemble a management team. Successful company buyouts are lead by committed, experienced management teams, especially qualified chief executives who can articulate and act upon a plan to make the company successful. Create a business plan for the company before you acquire it. Your management team should have a plan in place to shepherd the company past the financial strains that made it a good prospect for acquisition.

Good business plans demonstrate an understanding of the business. They also should map out an operations plan for the business after acquisition, with consideration paid to establishing a viable cash flow and creating adequate returns for investors. Line up your financing.


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Despite the many recent articles and books published on the writing of business plans, we frequently see business plans for leveraged buyouts that are improp-.

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Owning a business is the ultimate wealth generator but the difference between just getting buy and making a fortune in business is your knowledge of modern day business strategies such as the full leverage buyout.

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A buyout is the acquisition of a controlling interest in a company – and is used synonymously with acquisition. If the stake is bought by the firm’s management, it is known as a management. Management buyout: A common exit strategy when selling a business Share If you're an owner looking to sell your business or an employee thinking of buying the company you work for, you should be familiar with the term management buyout (MBO).