If you鈥檙e looking to buy a business, you鈥檒l be keen to get the best deal possible. No-one wants to feel they鈥檝e paid too much or that they鈥檝e underestimated the time it will take to earn a return on their investment. So, how can you ensure you鈥檝e got the best bang for your buck?
Get the Timing Right
It鈥檚 best if you clarify your goals at an early stage 鈥� are you looking for a long-term investment or something you can flip after a few years? Either way, do your research before taking the plunge. To get the best value, you should be aiming to buy a business at its 鈥榮weet spot鈥� 鈥� early enough that it鈥檚 shown promise but well before it鈥檚 reached peak potential. This is where you鈥檒l be rewarded for your knowledge 鈥� if you learn as much as you can about the niche you鈥檝e chosen, you鈥檒l be better placed to gauge movement in the market and be able to act accordingly.
Spot a Motivated Seller
It鈥檚 usually possible to get a better deal on a business if the vendor has a pressing reason to sell. It could be that they鈥檙e looking to retire, relocate to a new area or are having to split assets following a divorce or other life event. You can give yourself an advantage by ensuring all your paperwork and financing is in place for a quick transaction. If the vendor knows you鈥檙e ready for a swift exchange of contracts, you could secure a considerable discount on a business鈥檚 market price.
Consider a Failing Business
If a business has a sound trading history but is experiencing problems due to cash-flow or management issues, it could provide the perfect opportunity for a seasoned buyer to pick up a bargain and restore it to profitability. You鈥檙e less likely to encounter stiff competition from other interested parties and you should be able to negotiate a heavily discounted price. Make sure you have everything you need to make an informed decision and that you have the nous 鈥� and the budget 鈥� to fix what鈥檚 wrong.
Do Your Homework
Only by knowing all the ins and outs of your prospective business can you be confident of being able to negotiate the best deal. Commission a trusted team of experts and go through business records, accounts and sales history with a fine-tooth comb. If you鈥檙e methodical with the due diligence process, you鈥檙e more likely to spot areas of weakness that will give you a bargaining tool.
