subject: Evaluating A Business For Sale Proposition [print this page] When you are looking for a new business opportunity, there are basically three different ways in which you can do the same. One is to make a fresh beginning with all the new resources and set up everything afresh. The second way of doing the business is to take up the franchise business opportunity with some upcoming or the established brand. The third one is to take up a business for sale.
All the three models of doing businesses have their own merits and demerits. A fresh beginning will mean lots of investments and poling in of different resources to make it a success. It is a tall order to do so, but give you a total control over the business and its decisions right from the start. The Franchise business opportunity makes you cash in on the reputation and the goodwill of the brand values of the company and the products. Since the market already knows the product, there is a need to do a little marketing effort to make it a success. Some capital outlays from your side and the training and product support from the franchisor reduce your burden considerably. The pitfall is that if the brand value drops or there are differences and issues between the parties to the franchise agreement, then this will effectively mean the end of the business. The third option of the business for sale also has its own set of advantages and problems.
When you are considering a business for sale proposal, here are some of the tips which you shall be using for the same:
1. Look in to the books of accounts for verifying the assets and the liabilities for the same. It is not just the figures which you shall be looking at and accepting at their face value. You will have to dig a little deeper to see how the funds were applied and with what outcome.
2. Look into the shareholders interests and their expectations: The shareholders of a business meant for sale would definitely be looking to get a good deal from the management. The interests of the shareholders shall form a vital part of the calculations to determine the price for takeover.
3. Speak to the employees: Maintaining good personnel relations on the basis of reciprocity is vital for any good business. You shall be speaking to the employees for the employees to know their expectations and also to tell your own prior to taking the plunge for buying the business for sale. Uncompromising labour can spell the doom even for the best of businesses, so that part shall be very deeply analysed.
4. Look at the macro environment: How supportive is the government or administration of that particular region? What are the local taxes and other charges? Are these going to hamper your profitability? These questions shall be answered satisfactorily as well.
So, buying out a business for sale proposition is not easy evaluation. A lot of study of the documents and the physical verification of the assets also need to be done.
