The decision to buy an existing business is a big one that costs more but has advantages over starting a company from scratch. It is far more comfortable to get a handle on issues or changes needed, and if you don't have experience in that industry, it can eliminate many unforeseen hurdles. Also, redesign and ongoing operating costs are typically lower than startup costs, resources are already in place, and financing is more comfortable to obtain.
The type of business you buy depends on many factors, and understanding what is available on the market is your first step. Having Lesdon & Associates prescreen failing, or inappropriate companies is an excellent way to kickstart that process. The marketplace is always evolving, so understanding the dynamics of the industry you want to invest in is another vital consideration.
Focus on businesses that fit your goals, resources, and budget to help determine which business opportunity is right for you. Once you’ve found a business that interests you, your first of many due diligence questions is always, “Why is that business for sale?”
The many items that need to be explored during the buying process include assets, earnings, operating costs, market share, market durability, brand identity, intellectual property, customer base, vendor and supplier base, employees, management practices, resources, competition, and geographic challenges/changes. Another excellent due diligence question is, “Have any of the above factors changed recently?
One of the many areas where Lesdon & Associates can bring in insider knowledge to help is understanding the cost and effort involved in changes you will want to make to the business after the purchase.
Get your resources in place to help optimize the purchase process and protect you from unforeseen consequences. A CPA will make sure the accounting is transparent, a Lawyer will handle all legalities, and a Finance expert will help you sort through the many finance options.
Once you come to an agreement, you will want to get all documentation in order and close the deal with a comprehensive Asset Purchase Agreement. These can be up to fifty pages in length and should include, among other things a non-compete, employee agreements, assets, lease agreement, and guidelines for the use of those assets.