Buying a business is a very challenging task even you have been working in the same industry for years.
Before starting any due diligence process, we normally suggest clients to check the following:
- How long the lease is left on the business premise? If there are only less than 5 years left without any options to excises, there is no point to pursue further.
- Is the landlord strict with the buyer’s net asset position? This can be found out by contacting the managing real estate agent. If you do not own a house or have any investments, you may have difficulties to persuade the landlord to transfer the lease to you even the business owner wants to sell the business to you!
- Is the business a well-established business? Buying a new start-up business is always risky.
Then you need to start a proper due diligence check with our experienced consultant, our services include:
- Request at least two year financials, last eight business activities statements from the business owner,
- Review financial reports and analyse the main data, including add backs,
- Review Section 52 Form 2,
- Identify the major supplier and customers,
- Analyse business risks and compliance requirements,
- Provide an estimated business valuation appraisal based on the financial information,
- Check and review the lease agreement,
- Check the credit record for the business entity,
- Check the owner’s credit record with their approval,
- Conduct cash flow forecast,
- Setting up the right structure for the purchase,
- Negotiate purchase price with real estate agent,
- Provide solutions to finance the business purchase.
Our advice will ensure you make the right decision on buying a business.