Purchasing an existing business can be less risky than starting from scratch. It usually has an established customer base, a network of professional contacts, and a financial track record that will make securing finance easier.
An existing enterprise will require less work in, so that you can focus on growing the company, rather than getting it off the ground. You may also have an instant influx of income, as compared to continually pumping cash into a startup.
Before you consider buying an existing corporation, it is important to perform due diligence. A team consisting of an attorney, accountant, banker, and a broker can assist you in finding and securing the right fit.
There are many questions and issues to consider before you buy, including:
When you buy a business, aside from the income and assets you also take on the company’s debt. While it may seem to make a good profit, it can also be eaten up if it is riddled with debt. If you have the money to pay the debt, then your new venture may thrive. It all depends on your situation and whether or not you can afford to not just purchase the company, but also accept its burdens.
There are a slew of important questions to ask before purchasing an enterprise. The following is a partial list:
This is another area where your team can assist. Inquire about leases, licenses, and tax liabilities; it may also have patents and trade secrets that you’ll need to know about.
Finally, absolutely make sure to talk to its customers and suppliers. Get as much information as possible before you decide to move forward. It’s also a wise idea to get a credit report and check with the Better Business Bureau.
If you are considering purchasing an existing company, you’ll want to get the most value for your money. You will need to strategize and take into consideration several aspects to negotiate the best deal:
Include your team in negotiations. An attorney can help secure the best deal for you, and the best possible outcome for your investment.
Purchasing an existing company can be a very complex process, and one in which you will want to exercise caution. An experienced business attorney can walk you through negotiations, the drafting of terms in the sales agreement, as well as review any contracts put forth by the seller.
Last Modified: 08-09-2017 04:07 PM PDTLaw Library Disclaimer
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