Thinking Of Buying A Business? Read This First
For some people, buying a business seems like a better option than starting from scratch. There is already a built-in customer base and a brand identity. There are profits (hopefully!) and a series of accounts and tax returns in existence. It’s like hitting the ground running, with a head start! Of course, it’s not always that simple. There is usually a good reason why the owners are selling the business, and you’ll have to take on that burden. It’s often more expensive too, as the cost of the deal is usually higher than the average startup cost.
But, if you’re serious about buying a business, it’s a great opportunity. You’ll immediately put yourself at the head of an established company. You can give it a fresh start, and head in a new direction. Acquisitions are a key part of business, and there are plenty of success stories to learn from. Think about Google’s acquisition of YouTube and Android. Or Facebook’s takeover of WhatsApp and Instagram. Whether you want to start that first company or bring it into an umbrella brand, here’s what you need to know.
Hire a business broker
Business brokers are experts in acquisitions. They know how to deal with the complex and tricky process of buying and selling a large company. There are thousands of things to consider, not least the legal contracts involved. It takes an expert and professional to navigate the difficult waters. Not only that, but they’ll help you spot the best opportunities, and give you an insight into the acquisitions market. Most importantly, they’ll help you negotiate the best possible deal on the business takeover.
Do you understand the industry?
Many people like the idea of buying a business, because they think it’s the simple option. They believe that the company’s existing brand identity and market position will make it easy to operate. The truth is that companies are usually on the market for a reason. It usually means there is something wrong. Something to fix and turn around. You need to an intricate knowledge of the industry to find a new path, and seize new opportunities.
Buy the assets instead
There are two ways to buy a company, and it usually depends on how the business is registered. If you’re buying a sole trader business or a partnership, like a catering company, you typically buy the assets. This includes leases, customer information, inventory and stock. You don’t acquire the debts and other liabilities. As part of the contract, the seller should assume all debts. If you’re buying an incorporated company, it’s a little different. Here, you can choose to buy just the assets or the assets and the shares. If you buy the shares, you’ll also assume any debts and liabilities, so be careful here.
These are the first things you need to know about buying a company. The reality is very complex and difficult. So, consult a business broker, and begin putting together an acquisitions team. This will include a lawyer, and industry experts. Good luck with your new venture!