Top 10 Important Factors to Consider When Buying a Business For Sale

When seeking out a new business acquisition, there is literally a minefield of choices on offer. Each and every business sector will have varying business of all sizes, shapes and types. On the surface of things, a large number of the businesses you initially find in your internet searches, magazine reviews and discussions with brokers may appear to be ideally suited to your needs. However, armed with a few important pieces of information and areas to scrutinize may reveal hidden secrets or problems with businesses for sale that will help you to avoid inquiring about inappropriate businesses and ultimately making a huge financial mistake!

By following some of these hard and fast rules, you should get a better idea if the businesses you are considering are bargains waiting to be snapped up or literally acquisitions that could leave you up to your neck in trouble:

1) Turnover, Profit and Loss

First and foremost, any business you buy is about making money and in an ideal world, a return on your investment. It never ceases to amaze me the number of businesses that submit inflated or wholly inaccurate sales, profit or loss figures on business for sale adverts. First off, look at the margins compared to the sales figures - do they add up? You don't have to be a qualified accountant to realise that is sales (turnover) figures are reasonably good, yet net profit is very close to the same level then something isn't right. The same can be said if the net profit levels are very low. It translates that the business costs a lot of money to run and cash-flow is very thin on the ground. Even if the gross profit is high, this doesn't really tell you anything. Essentially you need to know if after all deductions the business is making money.

2) Over Inflated Valuations

So may owners of businesses believe their company to be worth way more than it actually is. In many cases this is down to an emotional attachment which is perfectly understandable but a huge hinderance. In most circumstances, business owners don't take the news too well when they are told the actual real value by a professional valuer. There's no solid rule but anyone who is asking for more than double the net profit value of their business is probably a little ambitious. So for example, if the next profit of a business is 40k, asking for anything above 80k would be pushing your luck. Most investors or buyers of businesses would ideally want to make back their money within two years so any figures that would exceed this time period shouldn't be desirable to any purchaser.

3) Years Trading

I've lost count how many fledgling businesses have been put on the market for ridiculous prices. Without even a full years trading, the owners have calculated their asking price literally on a few months turnover without taking into account market fluctuations, varying expenditure, not to mention a lack of goodwill value or trading history. This sadly happens all the time. Don't be fooled by misleading sales, profit and loss figures. Without any tangible length of trading time to call upon, no business owner can realistically calculate a reliable sales price without the help of an accountant or professional business valuer. If you are considering a business of this kind, ask how the figures they are presenting have been met. In most cases, I would advise you tread very carefully when considering buying a business with very little trading history. The chances are it isn't working for the present owners and the likelihood is, it won't work out for you either.

4) Due Diligence

If you are serious about a business you have selected for purchase, you must carry out detailed due diligence procedures into the full workings of the business, as well as the financials. Only at this stage will you gain a clearer insight into the day-to-day running of the business and the financial history. You'll see exactly where money is made, spent and wasted. Remember, once you own the business you take over all liabilities as well as the benefits of the business so do your homework and don't get caught out!

5) Assets

All businesses that have any tangible commodity should have some form of assets in place that add value. This could be in the form of property, equipment, intellectual property, contracts or even the staff. Whichever way you look at it, the business and it's strengths are solely the product of it's productivity and assets are usually a part of this. What is important to you is whether these assets are able to maintain their value or whether they will depreciate. Bricks and mortar for example, tend to appreciate in most circumstances. Equipment however, can depreciate quickly and require regular maintenance or repair. So it's important to gauge a real understanding of what the businesses assets are and whether they hold any true value or not.

6) Liabilities

Just as assets can increase a businesses value, on the flip side liabilities can drag it down. It is vitally important to check that the business you are considering doesn't have any notable liabilities in place. These can include debts or bank loans, vehicles or faulty machinery and even unproductive staff. If the liabilities are bound to increase the financial burden on the business in a notable way, consider your position carefully, This could be the sole reason that the business is being sold in the first place.

7) Disputes

Legal disputes or otherwise can be a massive headache for businesses. With ever increasing employment and business legislation in place in the modern world, it is not uncommon to find a business for sale that has one or more ongoing disputes which could hamper the future of the organisation. It would be extremely wise to ask the present owners of the business to declare any disputes whether past or present to determine if they are a stumbling block of any kind. If you take over the business, you have to take ever their disputes.

8) Competition

It goes without saying that any business wants as little competition as possible but it is very unrealistic or unlikely to expect this to be the case in present times. What you need to establish is whether the competitors will affect the business to the point where it could cause irreparable damage or if they are simply too insignificant to be concerned about. Sometimes competition is healthy and it keeps you as a business owner focuses and on your game. What you essentially need to recognise is whether any competitor will take too much of your market share to affect your turnover or whether the business you want to buy is strong enough to fend them off.

9) Employees

In the majority of cases, a business is judged by its workforce. If you have the opportunity to examine the workplace, speak to employees or at least observe the day-to-day workings of the business then do so. You want to know whether this business has a skilled and productive workforce. Anything less may be a concern.

It would also be very prudent to have sight of employment contracts or be made aware of any contracts that involve high salaries, bonuses or clauses that could be of a concern to you and the business.

10) Longevity

The bottom line is that any purchase you make is for the long game and your investment needs to be returned over a set period of time. In all cases, you need assurances that the business you seek to buy has the stability and productivity to maintain longevity to carry out and fulfill your long term strategy. Whether you intend to own and run the business only for a few years or for many decades, you have to weigh up all factors to ensure that your long term investment is a wise one.

Naturally there are many other factors to assess when looking to buy a businesses for sale, but these key points should get you on the right path in the offset. Each business is different and the circumstances surrounding the sale are always different. As the buyer, it is up to you to uncover the reasons as to why the business is on the market. We aren't all naturally gifted at carrying out detective work but with some common sense approaches and prudence, you should be able to reveal all the facets of the business for sale before making any final judgment as to whether to buy or walk away.

Ten questions to ask to purchase a business.

A buyer to ask a question of law is crucial to determine if the company deserves your attention with the purchase. There are literally can ask to dozens of questions, and I have defined the fundamental issues and areas that you should consider before making any decision to continue.

I'm 10 issues of the review of the acquisition of the company by the buyer for the sale of:

(1) why is that you are selling their?
The application is the most easy, but clear and in fact, it will be the most qualified question may request and tell you much about the integrity of the vendeur.répondre objections or any resistance.If the first occurs, must have your position very carefully examine it is given if a reliable response, you can move the likely issues.

(2) that you can view the accounts?
Challenge to consent to the examination of the annual accounts of the sales, cash flow account of profit and loss, balance sheet and the fee for the last three années.Si statement you want to borrow from the Bank to buy the company, the Bank should such information.

(3) all debts?
The company has debts to creditors, property or equipment rental? information as it may be sometimes referred as found in too late, therefore, sure that things are steps on the debt is financed, it has huge debts or long-term instead of this lease can adversely affect the company cash flow.

(4) is capital and what is the current state and values?
If the company many types of equipment or even the shares or assets, which is the current value?, equipment, repair or replace the? the company have actions that accumulate in the value of depreciation of capital?as well as their nature, or simply unnecessary? property can sometimes prove to be a value, when in fact, he is regarded as an obligation of the purchaser, it is clear that it must be replaced or repaired in simple terms means more investment and costs.

(5) are the guardians of the businesses, accountants and lawyers?
A very simple question, but it pays to know that addresses this very important aspects of the company.no doubt if you want to open a survey in legal business with them and expect little or no resistance to implement all the necessary information.If you find that is absent from the company in a professional representation in these key areas, ask if the business is really worth considering?

(6) allows employees to speak?
Some retailers will be pleased that you speak with their team of employees, sales are not confidential.If so, you can see how it works and the atmosphere in the team.It may be a significant turnover of holds, for example, you can order in accidents is discussed with employees. it is not always possible to confidentiality is essential, so that it cannot be regarded as price breaker, but the real if the opportunity.

(7), the company has a recurring orders?
Like words, turnover is vanity profit is common sense.If society depends only on the sale of cold, fluctuations in the market can affect the total revenue year after année.Cependant activity has, for the sale of renewable contracts with customers who walk after a certain time, you can easily calculate the expected level of sales, which ensures that they will add value to purchase company.long-term contracts are the character the company has good relations with their customers.

(8) how? business-customer relations
Many companies forget to maintain relationships bon.les sellers want to ask, how to keep the communication and good their questions clients.Et after-sales, as, for example, this can be very revealing that many companies who are guilty of resting on their sales lauriers.manque launched a true alarm due provided customers.

(9), the company now has any dispute or lawsuit for?
Make sure that it is this question as a business to buy is also in the matter, until, in the course, or is close to conclusion.pas remain supported the transfer of the capital for the company, which is on dry saigné.une terrible situation for the finishing and in many cases, there may be about it, unless the seller has deliberately misled the.

(10) is the process of converting current owner?
If a company sells, should there be a reasonable level of education or the transfer of operations and everyday practice in the most cases, retailers, vendor société.dans negotiate a fee for their services or for the asking price to be included in the sale of the société.De happy anyway, it is an important part of the transfer and it would be wise to accede to the Convention on the spot.

Of course, there are a myriad of other questions which are, however, vendor business sale, each company is different and is never the whole list, which meets all the critères.Ces issues must be in violation of the right and give you comfort in knowing that you have at least the basics will be covered in the draft list of questions to ask a small list, then why not add your own questions, make sure that you are armed with a set of questions contact the seller.

Ten questions to ask when the sale of the company

I've set up an exhaustive list of the top ten questions that every seller must take into account business potential issues, including the seller to the buyer. Yes, you read that right! Why would a seller should ask questions? A number of reasons. Firstly, the seller, the process is very long and bumpy. When it comes out on the market and not all your precious time, you will receive the merits of the study a flurry of interest in your company.

Unfortunately, there are a lot of time saving and window shoppers here is hard work., enough of the management of the company.Add the time and the energy required to sell the company, most handle negotiations and you'll have your hands full of good questions in the question., will save you lots of time wasted by telephone, meetings and emails and direct contact with people who are serious about how to buy used my 10 important questions that should the seller issues by speaking with the buyer.

(1) why they want to buy your company?
Most is a simple question, you can request and asked why you decided to sell the company seems to be the issue would be governed as exactly the opposite of what they are asked from the point of interest.When you have a clear and decisive response, chances are serious about affaires.retarder, breaks or resistance to this question can be the cause of préoccupation.Il can be translated, you currently on their ad and wanted to see was sold, in most cases, it is a waste of time. Window shoppers are, unfortunately, part of the sales process and guava, they can be long and frustrating.

(2) what is the current situation?
On a number of professions and the potential buyer, in case you are surprised, when considering the purchase of the company. Many buyers are in a career or company that you are the growth or want to spend that have little if any business relationship is not a specific point.This is where you need to analyse whether this person is searching for a way to escape from their current situation seriously on your work.

Of course, it is very easy to judge people in these circumstances, unfair, so keep the open spirit, but if the person is clearly seems be a field that has a relationship with you and your defined business qualification, experience and qualifications, it may be inappropriate for the sale.

(3) sales of this second company have access to them?
As a reply to an earlier question certainly will clarify exactly where your potential buyers become only from their own point of view. If the access of different companies will have all the fields and niche markets, which they intend to fully implement it yourself, you have to deal with the patch, however, if they have only to enterprises, in particular in its intention to market, it is only worth asking why a particular interest in this area and you will have a clear idea of why they want to get in the field.

Better you can reserve the decision buyers potentiels.Les more questions you ask.

(4) how many reports does not require the buyer show current employers?
Many people who are already in employment, to recognise their responsibilities and publishing long term 2 months may cause problems with each purchase and transfer process.

(5) have experience in the field of business?
If the lack of experience in the field of entrepreneurship, ask if they want to start to employees or contractors who assist the roles and responsibilities to be assumed that they are not qualified or experienced enough to gérer.Pensez to many potential buyers that they can "rope if you dangerous and foolishly access to each company."

(6) how to plan to finance the purchase of?
This question tends to block of agriculture, which captures the many potential buyers to Koka since the beginning of a larger loan.the Bank, in particular because of the global recession is no small feat.most banks will think and learn more about the smallest detail and still many buyers simply forgotten before funding speaking to owners of enterprises, provided that the obtaining of the credit will be more than a few forms.(si_vous_avez_répondu_à_la_question_et_les_retards_de_rencontre_ou_de_leurs_yeux_tout_d'abord_passent_par_la_salle,_vous_pouvez_parier_votre_fond_dollar_qui_n'est_pas_et_même_jusqu'à_maintenant) or (b) you have no money) comes first.

You're a seasoned entrepreneur, you need to know to Koka at this time are these buyers to avoid loss of time or real, professional users.

(7) Is financing the purchase are already in place?
The continuation of the previous questions is within your rights, if they have money and not by their own decision-making participation or third parties, such as a bank or an investisseur.dans both cases, you should know as much money and the capital needed to purchase not only your business but effectively run.

(8) the purchaser must be drawn up of the financial perspective?
If the buyer can see your financial statements, the buyer, which is capable of producing estimates of gross on the need to pay the wages, the amount of income and subsistance.Pas expenses necessarily expect each buyer perspective would be severe, however, the purchaser, this kind of dedication is clearly to illustrate the level of severity for the purchase of the company and you can only get the comfort of the present.

(9), the purchaser is responsible for the company system requirements?
Regardless of the question how much you do not know whether the buyer is not true, the amount of work nécessaire.Bien heard you want not only delays the buyer, but at the same time, it must promote a realistic image of what relates to employment.

(10) professional representation on the spot and their adoption?
That is seriously the need to speak with a lawyer and at least one Commissioner to the comptes.Sinon, ask why? there was a considerable amount of capital for your business and start a new business, but does make step have representation or accounting inform seems me a little bizarre.

Course, always make sure one of the questions above, politely and gently with tact.Nous do not want to offend people! several points are provided here are rather disruptive to some folk in the company, however, are questions which we expect that you will need to be: frequently asked questions ou.Si the measured using the points above, will measure a clear picture of exactly to your buyers are.