Default Buying an existing business.

[user776]

I've been interested in buying an existing business, and have had a number of questions rumbling around my mind unanswered. I'd like to know answers to the following questions and have a better idea of how businesses being sold are treated and analyzed before they're sold.


1. When buying an existing business, what paperwork should you require you to see before attempting to do so?
2. How can it be verified? Who do you need to obtain it?
3. Do you need a private accountant? an attorney? Both?
4. Should you review them with any of those professionals? Just review them yourself? Does it depend?
5. How can you verify the business owner's owner's discretionary cash flow?
6. Revenues? Assets? Furniture, fixtures, and equipment? Book value of the business?
7. When buying a business, should you bid to buy it based on it's book value, asking price, market value or something else?
8. When business owners are selling their businesses -- are they selling them based off their book value? Selling them for exactly their book value? Their "owner's equity" located on their balance sheet?

 

[scylla]

I've been interested in buying an existing business, and have had a number of questions rumbling around my mind unanswered. I'd like to know answers to the following questions and have a better idea of how businesses being sold are treated and analyzed before they're sold.


1. When buying an existing business, what paperwork should you require you to see before attempting to do so?
2. How can it be verified? Who do you need to obtain it?
3. Do you need a private accountant? an attorney? Both?
4. Should you review them with any of those professionals? Just review them yourself? Does it depend?
5. How can you verify the business owner's owner's discretionary cash flow?
6. Revenues? Assets? Furniture, fixtures, and equipment? Book value of the business?
7. When buying a business, should you bid to buy it based on it's book value, asking price, market value or something else?
8. When business owners are selling their businesses -- are they selling them based off their book value? Selling them for exactly their book value? Their "owner's equity" located on their balance sheet?

You should work with a business lawyer at a minimum, ideally an accountant as well. If you're asking these kinds of questions, then you definitely do not want to do this on your own.

 

[emmawats]

Hey, I know, buying a business is a big decision but you will get the opportunity to become an entrepreneur without starting a business completely from scratch as it's an existing one. But there are many things you need to find out to avoid buyer’s remorse. First of all, you should make sure that the business you’re looking at has all the business licenses and permits it needs. If the business you’re choosing is a sole proprietorship or partnership, there may not be official founding paperwork. However, a registered business entity, such as an LLC or corporation, will have organizational documents on file with the state. So you should verify all these documents before taking such big decisions. My best wishes to you for starting your business

 

[adomanim]

Basically you want to make sure that even in the worst case scenario, the business's FREE CASH FLOW (not profit, profit can be a very misleading number) is enough to cover 1) the minimum interest payment while maintaining a minimum cash balance and 2) pay down the loan over a 5-10 year period (depending on the business, obviously varies)

 

[adomanim]

Basically you want to make sure that even in the worst case scenario, the business's FREE CASH FLOW (not profit, profit can be a very misleading number) is enough to cover 1) the minimum interest payment while maintaining a minimum cash snaptube vidmate balance and 2)

pay down the loan over a 5-10 year period (depending on the business, obviously varies)