1. Try not to rush yourself
Don’t just run out and purchase the first business that interests you. The key is to look for several businesses for sale – researching only the ones that really excite you, and that you can afford.
2. Make many visits
Be sure to make several trips to the office, plant, or various other facilities they may have, and analyze it for possible repairs, safety concerns, etc. This is crucial when determining a selling price.
3. Meet with some key employees
As you get closer and closer to buying the business, meet with some employees to get a feel for the environment and how they run the business.
4. Consider transaction costs
Transaction costs include all of the money you’ll have to spend to get your newly purchased business up and running under your management. This may include marketing, advertising, repairs, etc, etc.
5. Take the business broker into account
Chances are, there will be a business broker involved. Business brokers are great for helping the transaction move along smoothly, but just remember, the seller will probably be paying them a small percentage of the purchase price. Often, the seller will add this amount to the asking price for their company.
6. Due Diligence
A complete due diligence examination of all the records of the company, as well as all the equipment and inventory, is an extremely vital part of the business buying process. Have an accountant assist you in reviewing these files.
7. Seek Legal Help
Purchase agreements can be extremely complicated documents, and it’s usually in your best interest to seek the help of an attorney, before signing your life away to the company.