BUYING A BUSINESS
BUYING A BUSINESS
Traditionally when a large corporation sets out to buy a business, they hire what is called “Investment Bankers”. These are large financial companies with expertise of analyzing the health and profitability of the business bought, they analyze the market and compare this business with others in the same industry, they evaluate the prospects for future growth and finally advise their clients how much the business is worth.
This must be done during the purchase or of any business being considered regardless of its size. The seller will always try to put forward and present the best picture of his company. But before one buys a business one must go through a procedure which is called “Due Diligence”.
Due Diligence consists of the following:
• Review and verify Accounts Receivable
• Review and verify Accounts Payable
• Check if all taxes are up to date
• Check staffing
• Review at least three years of Financial Statements
• Check the credit rating of the company
• Verify all the add-backs
• Do a thorough analysis of the competition
• Do a market analysis for future growth
• Return on Investment
These producers are just some of the aspects of a buying a business. As one starts digging deeper into the operation and financials of the business, many complicated questions tend to arise.
This process is complicated, time-consuming and difficult. It takes professional knowledge and experience to come up with a final yes or no. Buying a business is one of life’s major decisions and mistakes are very costly.
We have the knowledge and experience to do a proper analysis. If needed, we also bring in financial experts to provide us their opinion. Thus, when you buy a business you will feel assured that that you know all the facts and that you’re making the right decision.