Owning and operating a business is a dream of yours; however, starting a business from scratch feels overwhelming and complex. While many business owners will start their business form the ground up, others will purchase an existing business or buy a franchise.
This route could save you from the tasks involved with forming and structuring a business, the reality is that buying a business is anything but simple. It requires you to do your homework when it comes to the process of buying a business as well as what is required to get your newly purchased business operating properly.
Finding a business to buy
At Aman Law Firm, we understand that major business decisions occur at all phases of business ownership. Even before owning a business, there are crucial steps to take when you are seeking to buy a business. Our attorneys understand that purchasing an existing business is an exciting business venture but is also a major business transaction. Thus, we take the time to ensure our clients understand how to complete their due diligence when searching for a business to buy.
Often, a business broker will play a role in finding the right business to buy. Various online business marketplaces could help you locate businesses in your desired industry, helping you uncover pertinent details about the business. This can help you avoid issues such as fraud or misrepresentation. Additionally, this could ensure greater transparency before moving forward with the sale.
Purchasing a business
If you want to move forward with the purchase of an existing business, it is important to take the time to review vital business documents. Financial documents can help uncover the financial health of the business. Thus, it is imperative to review the tax returns, financial statements, cash flow statements, loans and liabilities of the business, a list of accounts receivable and the company’s balance sheet.
It is also important to properly value the business you seek to purchase. Certain business documents could help with the valuation. This includes the articles of incorporation, bylaws, operating agreements, organizational chart, certificate of good standing, personnel and employee information, existing contracts, customer lists and current business plans. It should also include deeds to real estate or current leases.
After doing your due diligence, a legal professional can help you with any questions and issues you have regarding the purchase of an existing business. Whether it is seeking financing, drafting a letter of intent or closing the sale, an attorney could guide you at all phases of this transaction.