Have you ever bought a business?
Discussion
I run my own business and one that I used to part own is up for sale. It's not huge (140k t/o and 60k profits) but it's stable and easy to manage, taking the current owner about 1 day a week. He's selling as he has other businesses and now simply doesn't have the time to drive it and can't find anyone who can be employed to drive it for him.
I'm going to have a chat next week but wondered if anyone else had bought a business on here...
I'm going to have a chat next week but wondered if anyone else had bought a business on here...
Have been the acquired and the acquiree.
What are you after? If it's just some general pointers, it's worth noting that there are so many variables to render 'general' pointers somewhat redundant but a few nonetheless....
Commission proper and full due diligence. Establish without doubt what exactly it is you are buying, what you are taking on and understand the scope of burden of responsibilities - those inherited and those that are new. It sounds harsh but even if you are buying from your best friend, don't trust them to tell you everything.
Establish how important the outgoing owners are on the business. Are there strong relationships between them and the customers? If there are, then you need to manage in their extraction over a period of time.
Get to know the staff before you commit. Who's the company dependent upon, etc.
Valuations. Opinions on calculating this vary. At the end of the day, it comes down to how much you are willing pay and how much they are willing to take. Make peace with the fact that whatever is agreed, both parties will go forward feeling like they've been done over by the other.
Defer as much of the payment price to a later date as you can and link stage payments to projected performance indicators being met.
HTH
What are you after? If it's just some general pointers, it's worth noting that there are so many variables to render 'general' pointers somewhat redundant but a few nonetheless....
Commission proper and full due diligence. Establish without doubt what exactly it is you are buying, what you are taking on and understand the scope of burden of responsibilities - those inherited and those that are new. It sounds harsh but even if you are buying from your best friend, don't trust them to tell you everything.
Establish how important the outgoing owners are on the business. Are there strong relationships between them and the customers? If there are, then you need to manage in their extraction over a period of time.
Get to know the staff before you commit. Who's the company dependent upon, etc.
Valuations. Opinions on calculating this vary. At the end of the day, it comes down to how much you are willing pay and how much they are willing to take. Make peace with the fact that whatever is agreed, both parties will go forward feeling like they've been done over by the other.
Defer as much of the payment price to a later date as you can and link stage payments to projected performance indicators being met.
HTH
loafer123 said:
The price?
Very true along with tangible assets, order book etc etc etc. Does the business rely on goodwill, you can’t really sell goodwill, company’s can change hands and the customers can disappear,. Even following the original seller if he is doing something similar..
sorry my original reply was a bit zealous
I bought an existing business 20 years ago and it was the best move I ever made.
nickv said:
loafer123 said:
The price?
Very true along with tangible assets, order book etc etc etc. Does the business rely on goodwill, you can’t really sell goodwill, company’s can change hands and the customers can disappear,. Even following the original seller if he is doing something similar..
sorry my original reply was a bit zealous
I bought an existing business 20 years ago and it was the best move I ever made.
Little repeat custom as the business builds/makes things but strong marketing process and website to drive traffic, tested over the past 5 years.
(Not zealous, don't worry)
nickv said:
loafer123 said:
The price?
Very true along with tangible assets, order book etc etc etc. Does the business rely on goodwill, you can’t really sell goodwill, company’s can change hands and the customers can disappear,. Even following the original seller if he is doing something similar..
sorry my original reply was a bit zealous
I bought an existing business 20 years ago and it was the best move I ever made.
loafer123 said:
nickv said:
loafer123 said:
The price?
Very true along with tangible assets, order book etc etc etc. Does the business rely on goodwill, you can’t really sell goodwill, company’s can change hands and the customers can disappear,. Even following the original seller if he is doing something similar..
sorry my original reply was a bit zealous
I bought an existing business 20 years ago and it was the best move I ever made.
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