3 Things a Good Business Broker Should Do for You When Buying a Business

3 Things a Good Business Broker Should Do for You When Buying a Business

Are you looking for a business to purchase? The purchase and sale of a company is an area few people have experience in. Here are 3 things a business broker should be able to do for you.

Did you know SMEs are attractive acquisition targets?

Buying a micro, medium or small company is an attractive option for many entrepreneurs with a certain investment capacity, but also for the sector’s competitors that are growing.

Some of the most powerful corporations like Google, General Electric, IBM, have made the acquisition of other businesses, part of their expansion strategy.

As a good independent business broker will tell you, now is a great time to buy an established business. Why? Because the choice and opportunity has never been better! If you are considering selling your business, it will benefit you to have a professional broker handle the deal because it is a very competitive market – and you want to ensure you get the best price for your business.

Opportunities

Many baby boomers are retiring – the generation born between 1946 and the first half of the 60s, known as the baby boomers, is reaching retirement age, and thousands of sexagenarians retire every day. Many of them have small and medium businesses that are put up for sale. Typically, baby boomers have three options when they reach retirement:

  • pass their business on to a family member,
  • hire personnel to replace them in the business and become “absent owners”,
  • or offer the business for sale to an entrepreneur.

If you are looking to purchase a business, a good business broker should carry out the following activities:

  1. Analysis of the market and sector

Determine if the sector is in the phase of introduction, growth, maturity or decline.

Establish specific details regarding direct competitors to the business you want to buy.

Collaborate with specialised appraisers to evaluate inventory, fixtures, goods, raw materials, machinery, and equipment in the business.

Offer full legal services covering the purchase-sale transaction, from the preparation of the letter of intent to purchase, until the final contract, as well as verify all necessary conditions are complied with by both parties.

  1. Review the financial statements

Buying a business means knowing all about its assets and liabilities, in detail. You do not want any nasty surprises further down the line.

A broker will ensure that the expenses of the company and the owner’s personal expenses are separated because this will reflect the real value of the company.

If the owner buys a luxury car on behalf of the company, you, as the buyer, will qualify this as an expense, not as an investment and, during the negotiation, this type of expense will be subtracted from the value of the business.

  1. Valuation

A business broker will ensure that the business has complied with any required professional audits and criteria of transparency, such as the publication of quarterly financial statements. As a potential buyer, a thorough and professional valuation will offer you greater security and less risk.

Enlisting the services of a professional business broker will ensure you can take full advantage of the opportunity to buy an established business either as your first entrepreneurial venture or as part of your own expansion strategy.

Category Business

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