12: Buying businesses

• Advantages of buying companies in your own business
• You know the business
• Achieve economies of scale
• Profit centers are already in place
• Expand geographically
• Better position to evaluate intrinsic value
• Vertically integrate
• Complement or fill out your product line
• Risks
• Branding mistakes
• Integrating the businesses
• Failure to clear up seller's potential liabilities
• Inadequate evaluation of retaining the management
• Seller's suppliers may not want to sell to you
• Over leveraging
• Inadequate accounting controls
• The Berkshire Hathaway acquisition model
• Description of the model
• Acquisition criteria
• Management roles
• Warning label
• Your acquisition team
• Evaluation methods
• Establishing the price
• Sales
• Earnings
• Return on Capital
• Intrinsic value
• Growth potential
• Leverage with seller financing
• Advantages of your being publicly owned
• Due diligence checklist
• Top ten Do's and Don'ts
• Session Quiz