14 Apr Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Patch entitled “10 Tips For Buying A Business” offers insights for those seeking to acquire a business. Buying a business is a major event, so coming into it well-prepared is incredibly important.
When buying a business, consider the following tips:
- Business for sale websites are a good place to find opportunities
- The two most common sale types are asset sale and stock sale
- Structure the deal to be a win-win
- Profitability is often demonstrated through tax returns and add-backs
- Financing may be obtainable through a bank loan
- Seller financing may be an option if bank financing is not
- Industry multiples are helpful for valuing a business
- Existing lease terms must be examined
- Utilize a business broker, accountant and attorney
- Purchase agreements include many important elements and should be professionally reviewed
A recent article from Lancashire Business View entitled “Buying a distressed business” explores the scenario of purchasing a business that is distressed. A business can become distressed due to factors such as debts, loss of contracts or bad management. Yet a distressed business can still be turned around.
When purchasing a distressed business, it is important to consider why you are purchasing it, what your budget is, and if you have the skills to run it. It is critical to understand why the business is struggling and how you will make it profitable.
A recent article from Transworld Business Advisors entitled “What Happens to Cash When Selling a Business?” discusses how cash is treated when a business is sold. Is it treated as an asset? Who gets it?
Typically, cash is not treated as an asset and is kept by the seller. It should be considered part of the sale proceeds when looking at what you will net after closing costs and taxes.
However with some businesses, cash may be critical to working capital requirements which means it might stay with the business. Examples include pawn shops and ATM businesses. Cash may also need to be considered when it comes to customer deposits or warranty issues.