{"id":14032,"date":"2023-10-18T11:57:43","date_gmt":"2023-10-18T03:57:43","guid":{"rendered":"https:\/\/peronaccountants.com.au\/?p=14032"},"modified":"2023-10-18T11:57:43","modified_gmt":"2023-10-18T03:57:43","slug":"what-to-look-out-for-when-buying-a-business","status":"publish","type":"post","link":"https:\/\/peronaccountants.com.au\/what-to-look-out-for-when-buying-a-business\/","title":{"rendered":"What to look out for when buying a business"},"content":{"rendered":"

\"MacBook<\/p>\n

Buying an established business is a great way to enter into the business world, or to expand your existing business empire. But purchasing a company isn\u2019t something to enter into lightly.<\/p>\n

Becoming the prospective owner of a new business means doing your homework, researching the business you plan to acquire and working closely with a team of advisers.<\/p>\n

Here are five key questions to ask yourself, before entering into a deal.<\/p>\n

    \n
  1. Why are they selling the business?<\/strong><\/li>\n<\/ol>\n

    It\u2019s vital that you know WHY the current owner is selling. It may be that they simply want to move on to a new business venture, or retire. But they may also be trying to extricate themselves from a business that\u2019s not performing well, or has intrinsic issues.<\/p>\n

    Important questions to ask will include:<\/p>\n

      \n
    • Is the owner retiring?<\/li>\n
    • Are they facing financial difficulties?<\/li>\n
    • Are they looking to pursue other opportunities?<\/li>\n
    • Are there any legal or regulatory issues?<\/li>\n
    • Are there any personal reasons for the sale?<\/li>\n
    • Are the finances in order?<\/strong><\/li>\n<\/ul>\n

      A common problem with both startups and established businesses is a lack of cashflow. It\u2019s possible to have a business with a reasonable customer base and ongoing sales, but for poor margins and rising operational expenses to have a negative impact on the company\u2019s finances.<\/p>\n

      Before you buy, drill down into the company\u2019s finances:<\/p>\n

        \n
      • Get a copy of the business’ accounts, both statutory filings and internal management accounts, and have them reviewed by an accountant<\/li>\n
      • Look for any red flags, such as debt, losses or cashflow problems<\/li>\n
      • Make sure the business is profitable and has a solid financial foundation.<\/li>\n
      • Are the staff capable and engaged with the business?<\/strong><\/li>\n<\/ul>\n

        As the saying goes, your people are your most important business asset. So, prior to buying the business, it\u2019s important to get acquainted with the top team, management and employees.<\/p>\n

        To learn more about your prospective workforce:<\/p>\n

          \n
        • Meet with the key employees and get their input on the business<\/li>\n
        • Make sure the core team is willing to stay with the business after the sale<\/li>\n
        • Think about the cost of replacing any key employees who leave.<\/li>\n
        • What governance do you need to do?<\/strong><\/li>\n<\/ul>\n

          Getting your due diligence and governance done is such an important step in your pre-purchase planning. You need to know this business is a viable enterprise, that there are no links to undesirable activities and that you\u2019re not taking on a whole load of legal issues.<\/p>\n

          To make sure you\u2019re ticking all the correct governance boxes:<\/p>\n

            \n
          • Review the business’ contracts and agreements<\/li>\n
          • Run due diligence checks on the company and its owners<\/li>\n
          • Make sure you understand the legal obligations of the business<\/li>\n
          • Get legal advice on any issues that you are not sure about.<\/li>\n
          • Can you get the best price?<\/strong><\/li>\n<\/ul>\n

            Purchasing a well-respected brand is a great move as an entrepreneur, but you don\u2019t want to pay over the odds when agreeing on a deal. It\u2019s important to have a clear ceiling on your budget, and to stick to your guns when it comes to negotiations on price and conditions.<\/p>\n

            To help secure the best price:<\/p>\n

              \n
            • Do your research and find out the fair market value of the business<\/li>\n
            • Be prepared to negotiate with the seller to bring the price down<\/li>\n
            • Don’t be afraid to walk away from a deal if you are not getting a fair price.<\/li>\n<\/ul>\n

              Talk to us about planning the purchase of a business<\/strong><\/p>\n

              This isn\u2019t an exhaustive list. There are plenty of additional factors to think about when buying a business. Any business sale is a complex process, where working with professional advisers will help you navigate the twists and turns so you come out with a successful deal.<\/p>\n

              As your adviser, we can help you:<\/p>\n

                \n
              • Run due diligence checks on the business<\/li>\n
              • Assess the company\u2019s finances to check for red flags<\/li>\n
              • Find the relevant routes to finance in order to fund the purchase<\/li>\n
              • Connect you with M&A experts to advise on the sale.<\/li>\n<\/ul>\n

                If you\u2019re looking to buy in the near future, come and talk to us.<\/p>\n","protected":false},"excerpt":{"rendered":"

                Planning on purchasing a business? We\u2019ve got five key questions for you to consider before you dive in at the deep end and complete the acquisition.
                \n#businessadvice #SmallBusiness #M&A #businesssale #deals<\/p>\n","protected":false},"author":13,"featured_media":14034,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1],"tags":[],"jetpack_publicize_connections":[],"acf":[],"yoast_head":"\nWhat to look out for when buying a business - Peron Accountants<\/title>\n<meta name=\"description\" content=\"Planning on purchasing a business? 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