Buying an established company, which already has businesses going, is not an easy task. The reasons for the entrepreneur to make this decision are known: from the expansion of their businesses to the attempt to establish themselves in a different area of action, acquiring a structure that is already ready. But do you know the reasons that led the person to sell the business? This is as important as the decision of who buys.
Among the aspects to consider, is understanding the real reasons and motivations that led the entrepreneur to sell the company. The history of the company (both successes and failures) must be considered, as well as the opinion of the community, customers and the target audience. In addition, a detailed cash flow projection should be made for at least the next four years. At Nakase law firm there is a complete explanation on conditions and compensation for buying into an existing business as a partner.
Four factors to consider before buying an existing company
In order not to get complicated in the future, it is important for the entrepreneur to consider some items before buying a company. Get to know four of these here and find out why they are so important at this time.
Before buying a company, reviewing the inventory is essential. It is important that you or a trusted representative is present at this time. All products and materials inventoried for resale must be verified. Make sure the entrepreneur who is selling you the business knows how to answer questions like how long a product has been in stock and the current condition of the items.
All products, equipment and furniture of the company must be considered here. In the structure, the entrepreneur must also take into account the construction, that is, the entire company. He knows the condition of the building and also the facilities. Find out how much was invested in maintenance in recent years and whether it will be necessary to pay attention to this.
It guarantees that you will have copies of all contracts and legal documents necessary for the operation of the company. In this category are lease contracts, distribution agreements, and employment, union and sales contracts. It has a specialized legal team, with prior knowledge of all legal issues involving the purchase of a business.
Find out about the marketing strategies used by the company. How did you get new clients? Is it a more aggressive form of marketing? Is there a discount policy? Answering these questions will help you define your own strategy and also get to know your customers better.
Furniture and Equipment
In most businesses, the transaction includes real estate as well as furniture and equipment. If a deal doesn’t include these items or you’re starting a new business, the expenses can add up quickly. The best way to make sure you’re making a smart investment is to consult an expert to help you through the buying process.
Buying a business may not sound as exciting as starting your own from scratch, but you can implement all the creative ideas you have. Buying an existing business can be just as challenging and rewarding as starting your own.