BUYING the RIGHT BUSINESS at the RIGHT PRICE

PRIMARY REASONS BUYING THE RIGHT BUSINESS AT THE RIGHT PRICE MATTERS

1. You don’t have to buy any particular business.  You should not buy one that you do not like.  You are likely to sell at a loss later.

2. Buy a business that you can be proud of, that you will enjoy operating, and that will make you happy to go to work.

3. Think about the rapport between you, the seller, and the business.  It will make it easier to work through the sometimes arduous path to closing if the two of you get along, and it will also be easier for you to take over the operation of the seller’s business, particularly if the employees are considerate. 

4. Be specific but not too specific.  Consider what is out on the marketplace without insisting there is only one particular type of business you are interested in buying.  You may find that there are other businesses out there that are a better match.

5. Don’t expect anyone to do your work for you.  The financial information received won’t be what you expect.  This is a privately owned business and you will need to carefully review the accounting and financial information to make sure you are satisfied of its viability. 

Financing

6. Today some percentage of seller financing is almost always present.  It may be the sole source of financing available.  The owners financing also helps give you some confidence in the seller’s representation as to income and expenses, and you have an avenue of recourse if there are problems after closing.  Additionally, it makes the seller interested in your success.

7. Do not pay all cash for a business even if you have it.  Keep some back for emergencies and borrow what you can in order to leverage your opportunity.  If a seller insists on an all cash deal, just be sure that some of it is held in escrow for a period of time after the closing so that you can protect yourself if later problems develop. 

8. Don’t be afraid to make an offer on a business before you have seen all the financial and other business records.  No one can know everything that is necessary about a business before making an offer.  Leave yourself room in the offer to confirm all necessary items but the offer makes it clear to the seller that you are serious. 

9. Investigate the business carefully after your offer is accepted and be sure to verify income, expenses, cash flow, and any and all hidden problems.  If there are significant developments, you may wish not to close and if your offer allows, you should be able to change your offer in light of substantial differences in the business than that which was represented by the seller.

10. Whatever else happens during the closing process, remain calm.  It can be a difficult and emotional time and you will be getting advice from friends, family members, and others which will range from best to worst.  At all times maintain a proper economic evaluation of the business and make sure that you will receive what you and your family need in order to be successful.  If not, don’t continue with the deal. 

11. After you have investigated everything, close as quickly as possible.  News of the sale of the business is usually damaging until the sale has happened and time simply allows one of the parties to have second thoughts or for other problems to develop.