Buy Businesses

One way to have a successful business is to buy an existing successful business. Existing businesses comes with a proven success story, ready-made brand recognition, plans and systems, inventory, and a history of success.

Apart from success business model, advantage of buy a business, may be a cheaper option than starting from scratch, cash flow may be immediate, existing goodwill with customers, suppliers and employees and easier to get financing.

But there are potential pitfalls as well, like cost of paying for goodwill may be more expensive than starting from scratch, no guarantee that customers will stay, risk of inheriting bad decisions, poor suppliers and/or bad staff and hidden financial problems.

Buying a business could be a complicated process, and it can be complex stuff because of the interrelation of business, legal, and people issues. It can, however, be a rewarding process if it is the right business and you have done your homework and researched the business thoroughly.

According to industry statistics, over 90% of the people who begin the search to buy a business fail to ever complete a purchase. Even worse, the average person looks at business for sale listings for a year or two and still, they never buy one! What a monumental waste of time!

The main reasons to fail to buy or ended up buying bad businesses are as follows:

• Most were first-time buyers and they felt overwhelmed and ill-equipped to handle business buying process.
• Most businesses for sale are overpriced and have plenty of problems.
• Buying the wrong business, that doesn't suits their skills, knowledge, interests, and personality.
• Not doing proper due diligence. Just because a business appears to be successful, and even shows a profit, does not mean that it is not without problems.
• Reason for Business sale, not determine why the business is up for sale and what the business environment will be like once you take over.
• Doing proper Business Valuation. Business Buyers have to do a detailed analysis of the business to determine the appropriate price to pay.

Here are some Do’s and Don’ts for buying a right business:

• Don’t buy a business which you don't understand.
• Don’t allow yourself to fall in love with the business; you may end up paying too much for it
• Don’t be rushed into making a decision.
• Do take professionals advice.

Business Buyer checklist:

• Validate the reason for Business sell.
• How long have they owned the business?
• How long has the business been for sale?
• What price are they asking? Separately, what are they asking for goodwill?
• Will the owner stay on during a changeover period to reinforce that goodwill?
• What is included in the sale? Check stock, trademarks, patents, customer database, property and equipment leases.
• Find out what obligations come with the business.
• Are the location and premises right for you? Does the business have all the necessary permits?
• Are there employees? Will they stay on? Will the present owner stay on for a period to support training
• How many hours does the owner work in the business?
• Are there financial records available? Look carefully at the business records and tax returns.
• What debt does the business carry? Look into leases on equipment, creditors, business loans etc.
• Are there ongoing contracts with customers? Do they pay on time?
• Will the owner agree to a restraint of trade agreement to stop them setting up the same business after they sell to you?
• Negotiate the price and payment terms.

Good planning, research, and a bit of determination will surely bring good result. All the Best.

Business Buying Agent

In order to buy the right business or franchise, you need to investigate its historical performance, operations, current status, staff and management, competition, industry and its future potential, all of which is so much easier to do with an existing business. If you have a potential target acquisition in mind, you need someone to approach confidentially, on your behalf and your identity is not revealed.

We act as a Buying Agent for you and we perform the following activities to assist you in your business acquisition process.

• Prescreening businesses for you.
• Helping you pinpoint your interest.
• Negotiating.
• Professional advisory and valuation.
• Assisting with paperwork.

[Go Back]