BuyingFrequently Asked Questions about Buying a Business
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Buying a business.
Buying an established business will require clear communications and commitment of time, money and energy. Doing your research before making a final decision is essential.
The process for purchasing a business generally follows these steps:
- Identifying the right business
- Sign a Confidentiality Agreement and receive an Information Memorandum
- Analyse the chosen business information and request more information / ask questions
- Visit the business and meet the owner
- Make an offer and pay a deposit
- Carry out a Due Diligence investigation
- Sign off on Due Diligence
- Carry out a Stock Take with the Seller
- Hand over, make payment and take possession of the business on the agreed date
- The seller assists for an agreed period of time after Possession
The advantages and disadvantages of buying a business.
Advantages of buying an established business include:
- The initial establishment and the groundwork has already been done
- The client base is established
- There is an existing market for the products and or services
- There is a proven financial record that could make it easier to access finance.
Disadvantages of buying an established business include:
- You may need to honour or renegotiate outstanding contracts
- The current staff could decide to move on after possession
- Further investment of funds may be needed to make the business successful.
- Identifying the right business can take time and money
Things to consider before selecting a business:
- Are you physically, financially and emotionally suited to the business?
- Do you have the necessary skills, experience, time, resources, vision and commitment to make this business a success?
- Will you benefit from this opportunity, bearing in mind your personal circumstances?
- Reduce the risks when buying a business by seeking assistance from an ‘experienced’ solicitor or accountant. Make sure they have been involved in several commercial transactions and ask for evidence.