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Buying a Business

Looking for Advice or Assistance with Buying a Business?

Use the checklist below to assist you in exercising the necessary ‘due diligence’ when looking at a prospective business for sale.

 

Things to Consider when Buying an Existing Business

As a prospective business owner you should determine the current worth of the business and its future business prospects.
When buying a business and considering its worth, you should think about the following:
  • Vendor – What are the reasons that the business being sold?
  • Sales – Can you see any patterns or trends? What is the business’ customer base? Who are the current suppliers?
  • Costs – What are the fixed and variable costs? Are there any staff costs?
  • Profits – Have you looked at previous financial records? Is the business profitable?
  • Assets – What assets does the business have? Does it have any leasing arrangements?
  • Inventory – Is the inventory on-hand included in the purchase?
  • Liabilities – Does the business have any outstanding debts? What refunds and warranties still exist for the business? Are there any debts owing on vehicles or assets included in the sale?  Check the Personal Property Securities Register
  • Purchase agreement / Contract of Sale – Have you reviewed the purchase agreement / contract of sale carefully?
  • Tax – What kinds of tax will apply? Eg; GST?
  • Legal issues – What are the legal agreements on leases?
  • Business structure – What is the business structure? Eg; Company / Sole Trader / Partnership.
  • Partnerships  – Are you buying a business with a business partner? Do you have a partnership agreement in place before you purchase?
  • History – What has and hasn’t worked in the business for the previous owner? Are there any negative online reviews or bad history?
  • Planning – Do you have a business plan to outline your business objectives?

 

Franchising

Franchising is another option you can consider if you’re looking to buy an established business. Franchising allows a business to operate under the name and brand of an existing business, and sell their products or services.

 

Professional Services

For advice and protection when buying a business you may like to engage the services of a solicitor, accountant or business adviser.
You can refer to our Professional Services Directly for contact details of recommended local professionals.

 

How much will it Cost to Buy an Existing Business?

There are many considerations that are taken into account when estimating a business’ worth including sales, costs, profits, assets, liabilities, tax and legal issues.
Refer to Valuing a Business to help determine different methods of valuation before purchasing an established business.

 

 

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