Purchasing a business is always a critical and most strategic decision for investors because taking over a running business involves risk and investment of large sum of money and in return the probability of success remains unknown. Therefore it is highly advisable for any business or the investor taking interest to take over any other business to make sure that the investment made for taking over that business proves to be beneficial instead of ending up making losses (Mullins. 2010, p. 89).
When a business or the investors consider the proposal of taking over any business, they have certain objectives in their mind. In most of the cases, the business making an investing in purchasing a business aims to become the market leader by taking over the ownership of the other business and eat up the competition & in other cases, business intends to take over so that it can increase its capacity of catering more of its customers and generating more revenues (Traver, 2009, p. 11).
Hence in all the cases a business when going ahead with the intention of making an investment specially for acquisition of some other business must make sure that the investment would turn out to be fruitful for the overall growth and success of the business in short and long run (Rich, 2008, p. 12). In order to avoid making loses in investment, a business must ensure that the return on investment would be sufficient enough for the business. Consideration must also be given that the business which is going to be taken over must have sufficient number of clients which would be of immense use for the business that is making the acquisition. Similarly the resources of the business which is to be taken over must be of great use to the taking over business in order to make sure that the investment made is worthwhile and not mere wastage of money (RisDahl, 2007, p.109).
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