4 Simple Tips for Buying a Business

4 Simple Tips for Buying a Business

  • Posted: Nov 16, 2016
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For many, buying a business is a more viable option than building one from the ground up. Buying an up-and-running business means that the legwork has already been done. The customer base is established, the employees have already been hired, and the lease has been negotiated. However, buyers should still practice due diligence to ensure they get what they are paying for.

Tip #1 Choosing a Business Type

Houston business brokers typically recommend that buyers choose companies that have a connection to work they’ve previously done, classes they’ve taken, or skills they’ve developed. It is a serious mistake for a client to buy a business for sale without being informed. A client’s lack of industry knowledge could lead them to overpay, and the learning curve is steep after the sale. However, clients should try to find a business in which they’re interested. After all, it’s easier to become a success when one enjoys what they do.

Tip #2 Finding Businesses for Sale

On the search for a business acquisition, many start locally. For instance, if a person works for a small business and enjoys the work, they may ask the current owner about the possibility of a sale. Alternatively, colleagues and friends may be able to provide leads on available businesses. Many opportunities come by word-of-mouth, and they disappear before they are listed for sale. Finally, a business broker can help a client find opportunities in their chosen niche.

Tip #3 Learn About the Company’s Finances and History

Before considering the purchase of a business, a client should find out everything possible about the company. A broker will advise the client to review the company’s financial records, employee files, contracts, and leases, as well as past lawsuits and other pertinent information. Due diligence can help a client understand the inner workings of a business, and it can point out areas of concern.

Tip #4 Sealing the Deal

If a client has done a comprehensive investigation on a company and they want to go ahead with buying a business, they must take a few more steps. First, the client and business owner must agree on a sale price with the help of an appraiser. Second, the client and the owner should agree on which assets are included in the sale. Third, the two sides should come to a payment agreement. After the terms have been outlined and agreed upon, a sales agreement should be created and reviewed by both sides’ legal teams.

The experienced Houston business brokers of Del Lingco International have been serving satisfied business owners for over 50 years. If you’re dreaming buying a business, contact us today!

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