subject: How to Buy a Business [print this page] It is not however without effort or risk, and the purchasing of a going concern should only be undertaken after much due diligence and sensible forethought. Before jumping in with both feet it is wise to stop and consider whether business acquisition is actually the right route for you.
Take advice. It probably goes without saying that major financial actions such as buying a company should not be undertaken without the advice of an accountant; if you already have one he will be in the best position to know how the acquisition will affect your business. If you are just entering the business world, do your homework before choosing; some accountants specialise in business acquisition so look for someone who can offer the best help. Cost it out. Although a fast track into business, acquisition is often a more costly route; do remember that you are paying for all of the hard work of those who established the business, as well as the firm's brand, reputation and customer base. It is however very easy for those selling to you to price their hard work too highly, so get your accountant to take a calculated, unsentimental look and things and to value the business appropriately. Check the rep.
The reputation, brand and client base that attaches a higher price tag to an existing business also has a possible dark side to it; accountants often talk about 'goodwill' when discussing business acquisition, by which they mean the intangible and yet potentially very valuable good reputation that a business may have built up over its time trading. While it is true that positive brand image is a valuable asset, it is worth remembering that any negative associations with the existing business or brand could be extremely hard to shake. Ask the question.
How to Buy a Business
By: Joseph Durke
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