The prospect of buying a business can be overwhelming. There are a lot of players and moving parts to manage. That means any number of things can go wrong, or get overlooked, but not with an experienced advisor on your side. BB&C will help you find and acquire a business that’s right for you. We keep an eye on the details and go beyond the business financials so you acquire a business positioned for long-term success.
How can you be sure your buying a business positioned for long-term success? Start by considering these 5 questions, and enlisting the help of an experienced Broker.
Questions Every Buyer Should AskFinding the right business
1. How long has the business been operating?
The longer a business has been around, the better. A business that has been profitable for many years typically has loyal customers and name recognition.
2. How long has the current owner had the business?
People don’t stick with a business if it isn’t worth the aggravation required to run it. Some very profitable businesses are also a real headache. As a result, the business may change hands over and over again. Beware of a business that has often changed hands without a reasonable explanation.
3. Why is the present owner selling?
This should be the first question on your list. Ideally, the owner is of reasonable retirement age and ready to do so. Other valid reasons for sale include a family crisis or health issues. If a seller who is only in their 30’s tells you they are ready to retire, you should be suspicious. The less credible their reason for selling, the less likely the business is to succeed. Their answer will also be a good indicator of how realistic they are likely to be about the offers they receive. Be sure to ask!
4. Why are books and records important?
Financial records are the best indicator of historical success. Look into the business tax-returns and the expenses. Take into account non-cash items such as depreciation and amortization, as well as the owners salary and benefits. Is the owner drawing a regular salary? How long does it take to collect on their receivables? All of these are important questions. Although the past is no guarantee of future performance, it is a good indicator and perhaps the best one we have.
5. Who are your key clients and employees
Ask questions and seek to understand these relationships. Both can have a huge impact on the business and it’s value. The ideal business will have some loyal employees and be operated with a clear chain of command. Do the employees have special skill, or are they easily replaced. You also want to know if the business is highly dependent upon one or a handful of key clients. Clients who account for more than 10% of gross sales can have a huge impact on the business should they ever decide to take their business elsewhere. On the other-hand, if the business has long-term contracts in place with these clients, it may add value to the business. The primary thing is knowing.
“Thank you for the remarkable job you did assisting us in the sale of our business. Our business has a long family tradition that is very highly respected. We put a lot of hard work and pride in the products we produce. It was a pleasure working with someone who takes similar pride in what they do.” –Margret D. “I’m sincerely impressed by the knowledge and hard work you employed in brokering my Practice. It took all three, coupled with your unique blend of straightforward negotiating and tact to make the entire process of selling not only successful but also satisfying.” –Dr. David C. “I was extremely impressed by your diligence and professionalism in marketing the business, and you brought that same approach to bear in closing the deal. I am convinced that it takes someone with your level of experience in this arena to move the entire process to a timely close. I made the right choice when I signed on with you.” –Bob D. “I just had to drop you a quick note of thanks for all the hard work. I am so pleased with the job you did selling my business…. I counted on your experience …. and you didn’t let me down! You had a plan for marketing my business right from the start. You laid it out or me and stuck to it. I am especially impressed by the professional and comprehensive way in which you sought to understand the business operations and then presented them to buyers.” –Christie W. “We appreciate the confidentiality and concern that you demonstrated while marketing our business… It has been a pleasure working with you and your staff.” –Joseph B. “You and your firm realized the years of hard work and dedication I put into building a successful practice. You really took the time to understand every aspect, as well as build a relationship with me, my staff, and advisors in order to fully appreciate it’s unique nature. Moreover, you were able to communicate that appreciation to its new owners- enabling them to recognize the value of the practice and the people that make it work…. I would be happy to recommend you to anyone considering the sale of their practice.” –Dr. G. “It is often a long and difficult road that finally brings a business acquisition to closing. The negotiation skills of your intermediary will make or break the deal… I entrusted the sale of both my business to the professionals at Business Brokers & Consultants- and that is why they are sold today!” –Mike R. “Thanks for all your help. I’m thrilled with my acquisition… It’s always been a goal of mine to own a business, but like most people, I didn’t know where to begin… Buying a business, rather than trying to go the “start up” route was definitely the right choice for me… With your help I’ve been able to take back control of my life in spite of a tough economy.” –Shane L. “Thank you for assisting me in the acquisition of (My Practice)… Your help in securing financing and structuring the acquisition not only made this purchase possible, but also made the transition period extremely smooth for Dr. H, myself, our patients and staff.” –Dr. Eric H.