Decision Time when Buying a Business
On conditional acceptance, gather all your facts, information and projections. Present any legal aspects to your solicitor, and all
financials, including projections for the bank, to your accountant.
Then present your low-risk business proposal to the bank, to get the okay on
some suitable finance. This is your decision - it has to feel right, check out
right, and sit well with your advisors advice prior to you going unconditional. For help in securing business finance at the best possible rates.
You have a signed agreement - Having conditional acceptance, be thorough, check
everything; call in an advisor, an industry specialist, and your accountant and
solicitor. Work closely with these people, it will give you a greater
understanding of the business and help you keep your costs under control. There
will be a lot of work to get through verifying financials, checking supplier
agreements, contracts, leases, determining the value of the customer base, the
suitability of employees, their terms of engagement, the ownership of the
intellectual property etc. You'll need to prepare a plan with forecasts for the
bank as well as check out all the other stuff (you need all the facts). This is
part of your due diligence process. If you discover what you have been told
isn't correct and doesn't satisfy your offer's conditions, then either cancel
the contract or renegotiate. A lot of this work usually ends up with your
accountant (who you can help considerably) - if you are unsure on their advice,
seek a second opinion, preferably from someone who specialises in the area.
Only once you are happy that everything stacks up, that the bank has approved
the money, and your solicitor and accountant are happy, do you go unconditional
and complete the purchase. Remember, this is your decision.
These points are intended to act as prompts - they provide an overview only.
When purchasing a business always seek professional advice.
Richard O'Brien is the Managing Director of nzbizbuysell - an online
advertising site dedicated to the buying and selling of New Zealand businesses.
For further details, visit nzbizbuysell - the New Zealand Business for Sale website.
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