Buying and operating a business can be very rewarding. It is an exciting phase in any persons life. This excitement is the root cause of most mistakes and issues during the purchase process. The first thing to remember is that you must make a calculated decision whether to buy the business, or to walk away from the transaction.
Here are a few tips:
- Get involved in businesses that you know something about. Alternatively, ensure that you can be trained to manage the business effectively within a reasonable period
- Research the business’ history
- Have a professional look at the financials
- Do a due diligence
- Speak to the employees, see if they are willing to say on.
- Confirm what you are buying; what is included, and what is not
- Is there a lease or property involved?
- Are the accounts and taxes up to date?
- Speak to the suppliers and key customers
- If you are not happy with the results or certain aspects of the business, walk away
After a decision is made, the legal process is simple:
- Negotiate the terms and sign a Letter of Intent
- Sign a Purchase Agreement
- Decide on a closing date and close the transaction
- Deal with any post-closing issues