Buying an existing company could be a great way to kick things off if you’re considering starting your own business. However, there are many essential details to remember when considering such a purchase. Before purchasing an existing business, review any existing buy-sell agreements in place. These agreements typically cover who will purchase a share of the business or assets following the death of an owner. They can also cover what happens if an owner wants to sell their company share to someone else. The agreement should include a formula for determining what Price each owner will receive for their shares and who will be responsible for paying out these sums at such time.
1. Have A Plan
Before purchasing an existing business, consider what you hope to accomplish carefully. If you purchase a business without any plans for change or growth, you may wonder why you spent the money in the first place. Look at the business and determine what areas need change or improvement. For instance, new equipment is necessary to keep up with demand, or a more efficient advertising method needs to be implemented.
2. Take Inventory
Knowing exactly what you’re buying is essential before acquiring the company. Have an itemized list of all the assets or liabilities an enterprise has and any debts the business owes. If a business owes money “on paper,” it can be challenging to collect it. It is why any buyer must have filed all necessary paperwork to understand what they are purchasing clearly.
3. Determine Owners’ Intent
As a buyer, you want to avoid walking into someone else’s home and stepping on toes. Before purchasing an existing business, talk with the owners to determine their intentions for the company. If they have no intentions of selling, this could also become a problem later on.
4. Hire A Lawyer
When you’re looking to buy a business, having a lawyer in your corner is essential to help protect your interests and ensure you know what you’re buying and from whom. Many people don’t think of this step until after the purchase is made, but it is integral in any business transaction. During your discussion with the prospective buyer, ensure that you intend to hire a lawyer for any legal matters concerning your investment.
5. Minimize Liabilities
In any agreement outlining how ownership will be divvied up, ensure you receive most of the business’s assets. Keep other owners from taking control because you may find yourself in a situation where only you can access the company’s cash and other assets.
6. Consider Partnership
When purchasing an existing business, contemplate partnering with one or more sellers. Each owner could have their ideas about what changes should be made to enhance operations, and this could be accomplished much more quickly if they work together daily.
7. Purchase Price
Once you determine your desire to purchase the business, consider what it would cost you. If the owner has thoughtfully written down exactly how much they think the company is worth, then use that amount as a starting place. However, be wary of any outrageous claims because they may only be used to secure your interest in purchasing the company.
8. Research The Competition
To ensure that your business will be successful, you want to know everything there is to know about the competition in your area and beyond. Please pay close attention to your competition’s strengths and weaknesses and make a list of ways that yours is better than theirs.
9. Use The Right Firewalls
You must make sure, should someone decide to take action against the business you have invested, that you can defend yourself without running afoul of the law. It ensures that your business investment is protected from being lost by any citizen who may be inclined to break the law for their reasons.
10. Determine Who Will Cover Losses
One of the partnership members should agree to cover any losses caused by one or more partners who may default on their share obligation. A pre-agreement is often made between investors regarding such a matter.
Buying a business can be very exciting, but it’s essential to research and ensure you’re purchasing the right company. Take the time to determine your needs and use this knowledge to find an existing business that will satisfy those needs. If you do your homework and have a firm knowledge of business investment before purchasing an existing company, you may succeed in business ownership quickly and easily. Excellent dental practices for sale MA, consist of all the necessary equipment, office space, supplies, and staff; these are generally priced at $1.5 million or more, depending on location and size.
