subject: Choosing The Best Among The List Before Closing The Deal [print this page] When you have set out to search for a company to buy, youll find it helpful to focus your activities on deciding what business or businesses you will consider like a printing company, auto parts and accessories, or a simple online printing shop and other business that you are interested in. You also have to take into account what limitations youll put on, where you want to locate the business, and what major reasons owners have in selling the company.
You will discover that only by the rarest kind of luck will you be able to locate the business you want in the area where you want to live. This suggests the need for flexibility in your thinking. Youll probably have to compromise to get the best of the available choices. And it may take a long time to find an acceptable compromise. Trying to find the right kind of business in the right place and understanding why people want to sell underlines the flexibility and patience. Meeting your needs and those of the seller will take care and thorough study. The effort will be time consuming. But the payoff can be productive and profitable.
After you have selected the business that interests you, you have to follow some stages of screening the businesses before youd consider closing the deal.
Rough screening. Following the preliminary research, you have to use a rough screen to narrow down the number of possibilities. Your aim would be to eliminate all but one or two likely businesses for more careful study.
Medium screening. In this step, youd asses the strengths and weaknesses of these concerns. How do the businesses you are considering shape up in technical, marketing and financial management qualifications? If your interest is a printing company, try to assess if they have good graphic artists, how do their cards look? Does it look professional or ordinary only? If the companys loss is management failure and not the employees, maybe you can hire instead their best graphic artists to work for you.
Fine screening. Once you have satisfied yourself on the performance of a company in the foregoing respects, you would conduct a fine screening. At this time, youd make a careful and detailed analysis of the financial and management history of the company. And youd prepare your own projections of what you could expect the business to do for you after you buy it. You should take into account the sellers biases, and your personal desires. Your ultimate goal would be to arrive at an acceptable price for the business.
Closing the deal. In the final step, youd close the deal. At this time you should get the help of your attorney and your accountant to take care of the many details of legal and tax issues. They will protect your interests when buying the business. You should consider the impact of taxes on the method of payment. Some ways are available for reducing the tax load- effective savings- in choosing the method of payment. For example, by making a smaller down payment and incurring interest on the balance, the interest may be deducted in figuring income taxes. Or the purchase price can be reduced and the previous owner taken on as a salaried employee or consultant.
Also, follow your entrepreneurial inclinations- get the best counsel so you can ensure that your interests are well served in this final phase of buying the business.
