Looking for businesses to buy is an exciting time. However, it is easy to get caught up in the excitement of potentially making dreams a reality!
Whilst a serious buyer will engage a team of professionals to perform due diligence and check the qualitative facts, it is also important to ask some qualitative questions…especially during the initial stages of research.
An experienced buyer will be privy to the sales process, which includes;
- Businesses are typically listed for sale on advertising websites such as Seek, or Business For Sale (The Brokerage list their businesses for sale, on the top advertising websites). The buyer will make an enquiry through this portal.
- The broker will receive the enquiry, and will request that the future potential buyer signs a confidentiality agreement. This agreement ensures that information regarding the business is kept secret and is only used for the agreed purpose.
- Once the agreement is signed, the broker will then provide the buyer with information such as Profit & Loss Statements, Lease Information, Equipment etc. (The Brokerage provide buyers with professionally prepared documents).
Whilst this information will provide the buyer with the information that they require to begin the due diligence process, it may not include some of the facts that will provide a clear picture of the history of the business. Additional questions will need to be asked. The more questions asked, the less risk there will be!
Here are some questions The Brokerage suggest you include in your quest to making your dreams if business ownership a reality.
- Why is the owner selling? Learn as much information as possible, to establish a clear picture of the businesses back story.
- What are the biggest challenges? Be aware of potential obstacles that the current owner has come across.
- How much is the current owner paying themselves? Make sure all add-backs are understood, and how they have been applied.
- How can the business grow? Gain a true idea of the potential of the business by asking the current owner of the opportunities they have detected, during their time as the owner of the business. Also ask if there have been any strategies that they have had limited success with, so the same mistakes aren’t made a second time.
- Who are the key customers, vendors or staff? The relationships that the exist within the business are a part of the goodwill of the business. This will impact it’s value. Gain an understanding of whether these relationships will continue after the transfer of ownership, and of ways to ensure they will continue to flourish.
- How much time? Knowing the amount of time the current owner invests in the business, will help give the new owner a clear picture of what the potential work-life balance will be.
If you are unfamiliar with the process of buying a business, speak to one of our professional brokers to get their expert advice.
Buyers and sellers benefit from using The Brokerage! We can help you connect with your dreams!