Buying an established business is a quicker and easier option than starting from scratch. In saying this, before you decide to buy, you will need to invest your time and effort into finding the business that’s right for you.

Following is our checklist of initial questions you need to ask before you buy:

  • Why is this business being sold?
  • Who is the vendor and what is their history with the business?
  • Are there any sales patterns/trends?
  • Who are the business’ customers?
  • Who are their current suppliers? Are there any contracts in place with them?
  • What are the fixed and variable costs of running the business?
  • What are the staff costs?
  • Is the business profitable? Have you looked at their financial records?
  • Does the business have any assets i.e. intellectual property or leasing arrangements?
  • Does the business have any outstanding debts i.e. refunds and warranties that still exist?
  • What kinds of tax apply i.e. GST, Capital Gains, Stamp Duty?
  • What are the legal agreements on leases?
  • What is the business structure?
  • Have you reviewed the purchase agreement carefully?
  • Have you had a discussion with the owner about what has and hasn’t worked for the business?
  • Is the location right for you? Can you change location?
  • Who is the competition?
  • Do they have employees? Their backgrounds and experience?

 

Our guide to buying an existing business:

1. Research and get professional advice

You will need to undertake a thorough due diligence review to ensure the business is worth buying.  As your accountant and advisor, we can assist you by assessing the financial health of the business and provide an independent valuation of the business’ worth.

We can also arrange for our partnering solicitors to verify licenses and review purchase agreements etc…

You will have the opportunity to have an initial viewing – some vendors require you to be discreet and not make known to employees and customers that the business is being sold. Take this opportunity to obtain as much information as you can respecting the vendors wishes.

2. Arrange finance

We can assist you in obtaining the finance you require. For example, some documents lenders generally require:

  • details of the business/sales particulars
  • accounts for the last three years
  • financial projections (if no accounts are available)
  • details of your personal assets and liabilities

3. Make an offer and begin negotiations

Firstly, an offer in writing needs to be provided to the vendor and then the negotiation period begins. We can assist you with the entire negotiation process.

4. Sign off and meet sales terms

To ensure the transfer of the business, you need to ensure all conditions of sale are met on your part.

 

If you are thinking of buying or selling an established business and would like to discuss your options, please call us on +61 3 8319 4076.