October 11, 2013. Most people have never bought a business before. They enter this process unprepared. If you learned anything in boy scouts, it was to be prepared. Even if they've had a successful career to this point or have been involved in corporate acquisitions buying your own business puts your own money on the line. Get educated and be prepared.
Determining the right business is difficult. With so much on the line, most get too scared to take a chance of buying the wrong one. Look at your strengths and align the revenue and profit with your talents and passion. Determine what type of business is right, and then start your search.
Surround yourself with the right experts and seek out their unbiased opinions. Business brokers either work for the seller or represent the deal, not the buyer, unless you have a separate agreement with them. Spend the money up front on the right deal. You need someone to strategize with and review the opportunities. You have to dig in and conduct a thorough due diligence. You need to know what questions to ask, what to look for, and how to verify the accuracy of the information you receive. Know what the business is worth. Many businesses are overpriced. The sellers have no logical reason for their asking price outside of deciding that they want to make a certain amount of money and they are emotionally connected. There are additional factors that limit the successful sale: sellers want all-cash sales, they do not provide adequate financials, the business may be declining and, they do not disclose enough information for someone to make a reasonable decision.
Deals fall apart when sellers misrepresent the facts, sellers have remorse, buyers get cold feet, and because of the inability to arrange financing. As a buyer, understand that deals can fall apart. Move on and start working on the next deal. Just make sure your experts are deal closers and do not repeat the same mistakes.
Buying a business is an accomplishment. Put yourself in a position to buy. Prepare and educate yourself. With the right information and advice, you can close your acquisition and start running your new business. For more information on business-related transactions, contact the firm at info@goosmannlaw.com or by calling 712.226.4000.