Here at Fit Small Business, we have more than a dozen articles written on as a company [buy . This ultimate guide, we bring together all of the resources on the purchase and the valuation of a company in one place. This manual covers the following:
- Where companies find sales
- you have to ask questions when buying a business
- As a business-to-value
- documents that you will need to be replaced when a company buy
- How your budget to put on a business purchase
- financing options for the purchase of a business
- your allies in buying a business: lawyers, accountants and brokers
(Make sure the section on the prolongation for Business startups (ROBS). a ROBS you can tap into your retirement fund to read, to buy a company, without taxes or early withdrawal have to pay penalties. more information contact Guidant , suppliers recommended ROBS).
Where to find companies to sell
companies are in sale in many places. Often the best opportunities are not advertised, so it's a good idea, the question of fellow entrepreneurs or industry contacts for leads.
Other sources are beginning your search following
- online business-for-sale sites - We recommend BizBuySell.com , because it is the largest online database of companies to sell
- Business Brokers -. Business Brokers provide the seller and are paid by the seller. However, they can help you to sell companies that you might not find on your own
- newspaper classifieds and industry publications -. Sometimes the traditional route is works best. While some small businesses do not advertise more in newspapers and publications, many have not.
If you are interested in buying a franchise, then on the Franchise overhead website. Most franchisors list online franchise information and telephone numbers list call for more information.
Other sources:
- Where do companies sell to - Ultimate Guide
- of buying a franchise - is it the right choice for you
- [1945002tofind8pagesfranchisesforsale] top
you have to ask questions about when a business
to buy when a small business to buy, there is a lot of information to reveal. You should know what questions to ask the seller, so you get all the necessary details and avoid buyer's remorse. Below I have to ask, listed some of the key issues. to provide for a complete list of questions can be found in our article you have to ask questions when buying a business
You have questions to ask yourself .:
- Why buy this business and not only start one from scratch? Are there benefits of buying such a great location, existing customer base, etc.?
- Do I have interest and experience in what the company does?
- there is a positive outlook for this type of business? What is the competition like?
- Can I afford to buy the business?
- Do I need a loan? If so, I may qualify for a bank loan?
- Gotta have personal assets, such as pension fund or home equity that I the business can use to buy? asking
Fundamental questions to the seller?
- What has this to do business
- Why for sale the business
- [is1945002] How old is the business, and how long it under the current owner in operation
financial performance of Business:
[1945005[Price of Business:
- What is the purchase price, and what assets are included in this price? (Most small businesses sales are like a sale of assets structured)
- As the purchase price was determined?
- Is Seller financing available? If so, how much
Day-to-day management of the business:
- Is currently the business rental space ? If so, the lease ends soon and need to be renegotiated?
- What licenses or permits do I need to operate the business?
- How the company generates revenue?
- One-off payments for goods and services? Subscription model? The long term or short-term contracts?
- If there are existing contracts, they can be assigned to the new owner?
- One-off payments for goods and services? Subscription model? The long term or short-term contracts?
[1945002allgemein] to speak so many different people as you can about the business' history and prospects for future success. What have the people to say about the business, at the time? What customers and suppliers you? should also be trying to identify how dependent the business to the current owner is? When a company in the current owner to a great extent depends, can it is not a transfer of ownership survive
Other sources :.
- you have to ask questions when buying a company - Ultimate Guide
As a business-to-value
, the seller is enter a purchase price for the business, but how do you know when the price is exactly? It is important to do a review of the company.
At the very beginning, you should have a good ballpark estimate of how much the company is worth. To a rough estimate of a company to obtain a review, please use the Business Valuation Calculator . This calculator shows you the approximate value of a small business based on its annual revenues and profits.
According to a rough estimate received, but before it's time to contact the seller and a price to negotiate, you are evaluating finetune need. To do that, you can in a professional valuation by an expert obtained as BizEquity . Alternatively, you can do it yourself by calculating Seller additional income (SDE) for the business. Seller discretionary earnings are the result of the business with certain issues back in added to involve a true picture of the business' earnings. Once you get the SDE, multiply that to get the business "rating by industry more. Click here to As a business-to-value you step by-step explains instructions on how to calculate SDE and to make a business valuation
Also based.
- How a business-to-value - Ultimate Guide
- How much does buying a dress costs
- Business Valuation Calculator [1945007?]
- Get a professional business valuation with BizEquity
documents, you need to be replaced when a company Buy
to a shop to buy a paperwork intensive effort. To avoid legal and financial problems down the line, it is important to replace all the necessary papers and reviewed by a lawyer and certified public accountant.
Once you are serious about buying a business, it is necessary to collect financial documents for the business, including the following:
- , the last 3 years the company tax return
- the last 2 years and year-to-date profit and loss account
- the last 2 years and year -to-date balance
- organizational documents (eg articles of association, Certificate of Good Standing from the Secretary of State, etc.)
- Existing contracts
- Commercial lease for the office building or commercial space
- franchise Disclosure Document (if the business is a franchise)
Finally, at the closing, you must replace the following documents:
- Purchase Agreement (Deal contract)
- promissory notes and collateral agreements for any financing, you will be using.
- Commercial lease (if applicable)
- Transferring documents for all vehicles that may be part of the purchase
- Bill of sale - ownership of tangible business assets
- non-competition clause by the seller (if applicable)
- bulk sales documents - these govern the sale of inventory
- IRS Form 8594 - shows how assets are allocated to the purchase
- counseling / employment - this is necessary if the owner with the transition of the company
in order to facilitate access for some time remain to be free templates of the documents mentioned can be found in our article you have to ask questions when buying a business
Other sources :.
- Questions to ask when buying a business - Ultimate Guide
Determine most people who think about how a company to buy, the most important Forgot your budget for buying a business
[:Setabudget!Hereareafewstepstohelpyoufigureouthowmuchyoucanafford:
- up your cash - Cash and cash equivalents assets such as cash, checkings and savings accounts and investments you can easily convert into cash. Your cash tell you how much you can forward to invest in the business. In most cases, you will at least make a 20% equity injection into the business in advance. For example, if you have $ 50,000 cash, you would have a sufficient deposit to a business that is worth $ 250,000 or less.
- Consider other debts that you have - you have a mortgage? A student loan? Credit card debt? If so, you need to in these commitments to factor in deciding how much you spend on the acquisition of a company. Calculate your debt-to-income (DTI) ratio by your monthly debt payments by your pre-tax monthly income is divided. You can include your spouse's income if you are married. Ideally, your DTI should be below 40%.
- to the business' cash flow to evaluate - If you have a specific company in mind that you want to buy, share his monthly net income by your monthly credit -Payments. This is your debt service coverage ratio (DSCR). Ideally, your DSCR be at least 1.25. anything less, and you will have trouble paying your loans with the business' ongoing back cash flow.
do these things, you should a good estimate of what you can afford to. How do companies sell and work with sellers and lenders to find, you can refine this initial estimate
Other sources :.
- How Much Does Buying a business expense?
- 25 franchises under $ 25K
- Best franchises under $ 10K [1945007[
financing options for the purchase of a business
If you are planning to buy a company, then more likely than not, you will need some sort of financing in order happen. There are various funding opportunities for a business to buy, chief among them the following:
- Seller Financing
- SBA loan or bank loan
- rollover for Business startups (ROBS)
- Other types of financing
Seller financing is provided a loan by the current owner of the company. Usually seller financing covers 30-60% of the purchase price of a company. Banks and other lenders look favorably on offers that seller financing compared to belong to those who do not, because it shows that the seller is investing success in business. more about seller financing read here .
Seller Financing is often used in conjunction with a bank loan or SBA loans . To qualify for a bank or SBA loans, but you generally need to have a good credit score (above 680), and some experience in the industry or in running a business. Also, the company should have a history of strong sales and profits.
If you are not able to qualify for a SBA loan or bank loan, may be another good option to invest to your own retirement money. In the purchase of the company A Rollover for Business Startups (ROBS) You can do this without early withdrawal to pay fees or taxes. Given a ROBS, you should have at least $ 50,000 in a 401 (k), traditional IRA have, or other eligible retirement account (Roth IRAs are not eligible). although ROBS can set up to be complicated. We always recommend professional help from a company like Guidant recommended ROBS provider.
Finally, consider Alternatives as a consumer loan, borrowing from family and friends get, or a home equity loan. If you are buying a franchise, the franchisor may offer a certain amount of in-house financing. We cover the range of options in our article How to get a loan to buy a company
Other Resources .:
- seller financing
- Best rollovers for Business startups provider
- How to Get a Loan buying a business
- franchise financing
your allies in buying a business: accountant, lawyer and broker
If you read all the way through this guide and feel in the amount of work overwhelmed involved in buying a business, do not worry because you do not do it alone. There are three people who immensely helpful for the purchase may be for you during your trip a company:
- your accountant - An accountant is useful in primarily to review the financial situation of the company, as prospecting. When a business to buy, then you are exchanging a lot of paperwork with the seller, and many of these papers will be in the nature of a financial nature. It is the business' past tax returns, profit and loss statements, balance sheets and cash flow statement included. Without a qualified accountant to verify this, it is difficult to know whether a company is a good investment
- your lawyer -.. an attorney for the nuts be necessary -and-bolts of the deal he or she can help you make a purchase contract, design, get all the permits you need for the company to verify the existing contracts of the company that will be responsible, and much more. for addition that can a lawyer help you encounter any problems with the company reveal early on. in violation of zoning regulations, for example, if the company is currently in operation, comes the could the new owner to track back
- your Business Broker -. Finally, consider working with a business broker. A business broker represents the seller and a fiduciary duty to the seller. The seller pays the commission of the agent. However, as a buyer for you to bring very valuable you listings for sale in Send, negotiate with the seller, and a certain structure in the process of information and documents to exchange a broker. To find a business broker, a good starting point is the International Business Brokers Association or a fellow businessman calling a referral.
Let us make each of these three people setting the process of buying a company a little less stressful for yourself.
Bottom Line
buying a business is an exciting time! However, there is a lot to consider. You should devote a significant amount of time and effort in searching for the best business, be prepared to buy, appreciate the business, paperwork exchange and financing of the acquisition. Good luck
!
0 Komentar