Make sure you’re informed about the buying process before you begin searching for your first business to buy to get things off to a smooth start.
Finding and buying the ideal business can be an arduous process if you don’t know what you’re doing, so it’s important to make sure that you’re well informed before you begin the journey to avoid wasted time and simple mistakes.
In this blog, we’ll explain the 5 basic steps to buying a business and reveal the key considerations you should make along the way.
Find the right industry and business for you
The success of your business purchase will often depend on the prep work you’ve done to choose a business that fits in with both your personal and practical criteria. Read our blog on how to find the ideal small business for sale for help discovering which industry and business type is right for you.
Thoroughly review the business
This step involves making basic enquiries and experiencing the business first-hand to get a feel for how it is currently being run. You may want to pose as a customer to experience the customer journey and service being given by current employees.
You should also approach the business owner and ask some basic questions about the business. Find out why they are selling and a bit of history about the business. It’s worth really taking the time to think carefully about the questions you are going to ask to prevent wasting time pursuing a business that isn’t right for you any further.
The valuation of a business is an extremely important part of the buying process, and can be fraught with problems as the value perceived by the owner can differ vastly from a valuation performed by someone impartial.
There are a number of different techniques for valuing a property including the multiple of profit method, asset-based valuation, and book value.
When looking at the value given to the business by the seller you may wish to ask them which method they have used to come to their valuation and then check it by referencing their accounts and financial records. If you’re not confident doing this yourself you could employ some help from a specialist accountant.
Once you’ve got your sights set on a business to buy that you’re confident meets all the criteria you set out in step 1, then it’s time to get down to the nitty-gritty.
At this point, you may wish to employ some help from the specialists. This could include the likes of your accountant, banker, legal specialist and/or an expert in buying businesses.
Due diligence simply gives you the opportunity to thoroughly review the business with the help of professionals to make sure that there are no unexpected surprises later down the line.
Just a few of the things you should have investigated during due diligence include the company’s financial accounts, premises, stock, employees and brand reputation.
Closing the deal and payment
Once the finer details and price have been agreed on there’s nothing left to do except complete the final documents and sort out payment.
The way you choose to pay will depend on your circumstances and the size of the business you’re buying. Very large purchases may require a complex finance agreement, whilst smaller purchases may simply be paid in full on completion.
Where to find your perfect business
Looking for a stress-free, professional and trustworthy company to buy a business from? Get in touch with our team of skilled and experienced regional partners and let us help to find the ideal business for you by calling us here at Business Partnership on 0870 444 0 555.