Buying A Business Do Your Homework!

When Buying A Business Do Your Homework!

It may seem obvious but it is easy to lose sight of the following considerations when the emotion of engaging in a business venture comes into play.

   . The sale contract should allow an adequate period of time for you to do your homework to ascertain that all aspects of the business are in order.

   . When buying a business you are buying an asset from which you expect a return on your investment. The higher the risk the larger would be the expected return and vice versa.

   . Engage the services of the appropriate professionals. An accountant to analyse the financial records to, among other matters, ensure the business is capable of achieving your required return on investment and that the asking price is fair and equitable. The accountant will also advise you of the most appropriate structure to use to purchase your business. A lawyer will examine all contracts, agreements, licences and permits to ensure of their adequacy & legality.

   . If sales of the business are generated from a few key customers, the agreements with those customers need to be examined to see how easy it would be for those customers to end the relationship.

   . Likewise as above, if the business relies on a few suppliers, the arrangements with those suppliers need also to be examined.

   . It is often said that the employees are the business. If the business relies on a few key employees and or their intricate knowledge, then you must ensure that they are going to stay on or at least pass on their specialist knowledge to the buyer.

   . You must ensure that the rent or lease in place ensures an adequate period of tenancy and also that it is legal to operate from the premises as it is in its present form.

   . If intellectual property exists you must ensure that it is properly identified, the seller is the legal owner and that it can be easily transferred to the buyer.

   . Ensure that all the required licences and permits are in place with the appropriate levels of government and authorities.