|
 Entrepreneurship, a vital ingredient of the American Dream, enjoys an added twist these days: rather than start from scratch, many enterprising buyers are purchasing pre-existing businesses. Buying someone else’s “baby” has its advantages--you avoid the headaches of start-up, it’s usually cheaper, and a proven track record can facilitate the financing. Not a foolproof way to profit, “caveat emptor” applies big time here.
So if you’re contemplating the challenges of business ownership, be savvy about your purchase. Most first-time buyers don’t know exactly what they want. Conduct a thorough search for opportunities via the media (local and regional business newspapers, trade association journals, the Wall street Journal, the Internet) and by talking with local business groups (law, accounting, insurance firms), friends and colleagues. Know what you’re getting into.
When building from the ground up, you’re familiar with the skeletons in the closet. When buying someone else’s enterprise, you’ll need to find them. Assemble a team (attorney, commercial banker, insurance specialist) of professionals to help you. Be aware of the documents critical to an informed analysis of any establishment: income and expense statements, balance sheets and income tax returns for the previous 3-5 years, an inventory list, and contracts with major suppliers and customers.
Get personal. Get to know the owner, find; find out why he wants to sell. Will he supply financing? Will he be your partner initially? Volunteer to determine first hand how the business functions and how active its customers are.
When you do buy, verify that your purchase and sales contract contains a complete list of the assets you’re purchasing, specification of any liabilities you will assume, a provision to ensure clear title to the business, a clause to protect you against any undisclosed liabilities, mention of any contingencies you must meet, employment or consulting agreements with the seller, and any restrictions on the seller’s right to compete with you.
AMERICAN HERITAGE REALTY
SUPPORTS THE INTERFAITH COUNCIL FOR THE HOMELESS
americanheritagerealty.com 508-255-2202 |
