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Careful Research Is Required Before Buying a Business

            If starting your own business doesn't appeal to you, give serious thought to buying one that's already doing well and producing a good profit. Of course, even if the owners can provide you with impressive spreadsheets regarding recent high profits and minimal losses, you still need to do considerable research before buying a specific business.

            Your chances of success will be best if you choose a company that provides goods or services in keeping with your own knowledge, interests, and experience. However, just because you think a specific business can make you instantly wealthy due to its current success, you may still be making dangerous assumptions. After all, popular products can become quickly outdated and a new competitor may have just arrived who can offer the same services you’re marketing at a greatly reduced fee, especially if it's part of a large national chain.

How Can You Find out When Businesses Are Available for Purchase?

  • If you like your current employer, ask if the company is available for purchase. If necessary, you can say that outside business associate has been asking several close friends at various companies this same question. If you don't think the inquiry can jeopardize your job in any way, go ahead and note your own interest in possibly purchasing the business;

  • Ask other business owners in your local community if they know about any nearby businesses that are looking for buyers. Unless you prefer to move elsewhere or are at least open to the idea – keep in mind that your chances of obtaining accurate information about a business you’d like to buy are always best if it's one operating in your city or town. It’s usually easy to find people who work for nearly any employer who would be more than happy to provide you with the “inside scoop” on what's really going on behind closed doors.

Where Can You Obtain the Most Reliable Information About a Company?

  • Be ready to purchase a copy of a business’ certified financial records. Ask the current accounting department a number of specific questions after you've indicated your interest in buying the company to its owners. If they’re currently interested in selling it to you, they should be willing to help you gain access to current information regarding its cash flow status, accounts receivable -- and detailed personnel records indicating what every employee is earning in regards to salary and benefits;

  • Consult with your Peachtree City business attorney for his advice on how to properly complete your “due diligence” research on any company that interests you. Also, see if any local business brokers can provide you with objective data about local businesses that appear desirable;

  • Check local deed records if a company appears to own a lot of property to be sure it's all free of any liens and isn’t co-owned with others;

  • Talk with a lawyer who specializes in tax matters who can tell you the best ways for you to complete your purchase so as to minimize your tax burden.

Before You Actually Finalize a Purchase

  • Make sure you have adequate cash (or definite loan money) available to keep running the company for at least one or two years;

  • Try to secure employment contracts with some of the company’s current, most productive employees – making sure they'll stay on for at least another year or two – in exchange for an increased salary and benefits – as well as possibly tied to a bonus after completing another calendar year;

  • Ask your Peachtree City business attorney to draft the most advantageous business purchase agreement possible, while stay in close communication with the seller to be sure all proposed terms are fully agreeable.

     

    Finally, be sure that you or someone else who is completely qualified is prepared to step in and run the company if one or two higher-level executives decide to leave, shortly after the sale becomes finalized.

     

To obtain help with handling all of your Georgia business planning needs, please contact the Law Offices of Shane Smith today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.


Shane Smith
Advocate for the Seriously Injured in Georgia