The buying or selling of a business can be complex, and there is clearly a lot on the line in a financial sense. Whether you are buying a business and looking for a good investment or selling a company you bought and hoping for the best possible sale price, you need to know exactly how to navigate this process.
To that end, let’s break down a few of the things you need to consider.
For the purchase
First of all, let’s consider buying a business that already exists. This is often seen as beneficial, compared to starting your own company, because you get an established business with a working model. Some things to keep in mind include:
- Make sure it matches your vision. If you buy the business and then immediately change everything that was working, you can lose customers.
- Get an accurate valuation. Many business owners are so close to their own companies that they overvalue them. You need to know the price is fair.
- Consider why the owner is selling. If the reason is something you can’t fix, the business may not be profitable.
- Consider the competition in the area. If the area is oversaturated with companies doing what you want to do, it may not thrive.
Buying a company comes with perks like existing customers and branding, but you need to know it’s the right business.
For the sale
On the other hand, maybe you’re interested in selling a company you own so that you can retire or move on to something new. A few things to think about include the following:
- Look at what the market has done lately. Don’t sell in a slump, if possible.
- Think about what you want to do in the future. If you need cash to start a new business, for instance, that factors into your preferred sale price.
- Consider your employees. Do you want to do what is best for them when finding the next owner?
- Again, get a valuation done. Find out exactly how valuable this asset is.
If you are a co-owner with someone else, you also need to think about what that partnership means and what obligations you have. Either way, take the time to look into your legal options carefully.
