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Assessing the culture of a business you may buy

by | Apr 28, 2021 | Business Law |

Buying a business is a highly complicated and intricate process. Often, parties in these transactions are focused on the numbers: a business’s liabilities, profits and valuations to determine whether they want to buy the company.

However, one area that sellers and potential buyers might overlook during this complex matter is the intangible assets of a business, like its culture.

Assessing culture

There are several ways culture can affect a business and vice versa. Thus, when researching an organization, buyers will want to observe and understand the culture before making any decisions.

Some of the organizational culture components that buyers might investigate include:

  • Employee retention
  • Employee engagement
  • Worker appreciation or awards programs
  • Flexibility in work arrangements, like remote work opportunities
  • Decision-making processes
  • Goal-setting policies
  • Community engagement
  • Attitudes toward innovation
  • Preference for teamwork or independence
  • Leadership attitudes
  • Approach to customer service 

These components can say a lot about a business that monetary figures may not reflect. It can also help a potential buyer determine if they are a good fit to take over the company.

In some cases, it could become clear that the current culture is toxic or does not work the same way a new buyer would want it to work. If this is the case, the buyer could walk away from the transaction or identify solutions that would improve or change the organizational culture to fit their vision.

Taking the next steps

Sellers and potential buyers in Canada are looking for any detail that might push negotiations in their respective favour, and both sides want to be cautious before agreeing to anything. Thus, after researching a business’s financial and cultural assets, you can determine whether you wish to buy a business.

If you do decide to make an offer, you can work with an attorney to draft purchase agreements, financing and other paperwork. And together, you can negotiate the price and terms of the offer to seek the desired outcome.

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PMR Law have been named the winner of the Business Law Firm of the Year 2017 Canada by CV Magazine and the Global 100 Excellence Award as Firm of the Year (Litigation Counsel) Canada. These awards are much appreciated by the firm. In everything we do, we strive to provide the best service for our clients.