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1 + 1 CAN = 3

 

One method for increasing both revenues and profits can be through an acquisition.  You see it all the time, one similar business buys another.   Examples include corporations as large as Berkshire Hathaway Energy acquiring another energy company, to smaller twenty-man operations buying a ten-man business.

So why can this make sense and how can 1+1=3?  In many acquisitions, if done properly, the revenues can continue for both entities at the same level or even higher.  However, in many cases, some of the expenses are duplication.  These duplicative expenses can be cut, adding to the bottom line of the combined company.

Some duplicative expenses might be:

  • One outside accountant, attorney, advertising agency for both companies.
  • Internally, a potential reduction in compensation by having one; owner, sales manager, office manager, and service manager.

Efficiency and scale can also be positively affected by:

  • Fully using available assets and selling unused assets.
  • Using existing people more efficiently.
  • Acquiring larger purchase volumes for lower prices.

We currently have over $40 million in listings.  Check out our website and see if there is any 1+1=3 for you!

Mike Schoville

The Business Brokers, Inc.

mschoville@tbbinc.com

www.tbbinc.com

515-306-8487

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