What Key Aspects Should a Buyer Evaluate When Acquiring a Business?
I have worked with well over 1,000 prospective buyers looking to purchase a business over the past 15 years and I would estimate that probably 80% to 90% do not have a particular business category in mind. I can also say that may who have called my office inquiring about a specific business often end up buying something very different from what they had initially called on. A common question I get is what is a good business to buy? While I do have preferences for specific types of businesses, the better question is what are the key aspects I should evaluate in determining which business to buy? Here would be my top 5 factors a buyer should evaluate to narrow down the options and help determine which business is the best fit for them.
Do I have any related experience I can leverage into this business?
When the economy went south in late 2008, many buyers who had used SBA loans to purchase a business had defaulted on their loans. The SBA evaluated this and determined that one of the key factors why new business owners were not able to successfully operate their business during these difficult times was due to (more…)
Read MoreCan Baby Boomers Reduce Financial Risk by Selling their Small Business?
Imagine your financial advisor telling you to invest 80% of your net worth into one stock. This may sound crazy, but small business owners are doing this every day.
It is well known that investment diversification is one of the more important ways to reduce financial risk to an investment portfolio. According to Investopedia, “diversification is a technique that reduces risk by allocating investments among various financial instruments, industries and other categories”.
For better or worse, the majority of net worth of a successful small business owner is most likely held within their own company.
According to the FPA/CNBC Business Owner Succession Planning Survey released earlier this year, an estimated 10 million small-business owners plan to sell their businesses over the next ten years. Most of these business owners are baby boomers. According to the study almost 80% of small business owners are relying on the proceeds for retirement. The scary fact is that the average small business owner is anticipating between 60% to 100% of their retirement needs will come from the sale of their small business.
