There are two major phases involved in buying a business: Obtaining the vendor information and the negotiations (which should start after you have had discussions with your professional advisors).
Information on a business to be bought should be well presented, comprehensive yet easy to read. Ideally it should contain information on all of the following:
1. Ownership & history 2. Financials – balance sheet as well as profit and loss accounts for the last five years and projections for the next two.
3. Nature of operations.
4. Customers and competitors (may be part of a SWOT analysis)
5. Facilities and plant 6. Management and organizational structure 7. Other staff 8. Future development potential 9. Reasons for sale 10. Hand over details – ongoing vendor help - Term 11. Lease details of any premises - Rights of renewal and rent reviews due Before entering negotiations with a prospective seller, the following assessments should have been made:
1. How the seller came up with his or her asking price, are you happy with the values.
2. Why you want to buy the business 3. The current market value of similar businesses 4. Your cash flow expectations under your circumstances, will it cover your income, debt servicing etc.
5. Alternatives to buying (self start new)
6. What return on your capital will the business provide, after salary allowance for owners input.
Buying a Business - To learn more about this author, visit David Weusten's Website.
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David Weusten
(Visit David's Website)
David Weusten is a regular article writer
and brings with him over 28 years
experience in the finance industry, both
in NZ and overseas. He has been published
in the Sunday Star Times, the New Zealand
Franchise Magazine and regularly on
websites. He has also published two
business guides and recently published a
money management guide with an e - version
at fspnz.com/publications.html . He
would be happy to answer any questions you
may have related to Business, Finance,
Franchising and Banking in New Zealand.
Email him at dweusten@
fspnz.com. If you would like to know
more about his company, Financial Service
Providers, visit their website www.fspnz.com.
www.fspnz.com/profile.html
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