There are many ways to buy a business such as buying a acquisition or part of a ‘Buy-and-build’ strategy. An acquisition is when one company purchases shares or assets from another company. However, a ‘Buy-and-build’ strategy is when a company expands its operations by acquiring a platform company with developed expertise that it can build out.
Buying a business can all depend on the type of business, industry, size, turnover and location of the company. However, there is a plan that most use to buy a company no matter what the opposing factors are. This plan is:

Deal planning – targeting pool- valuation- funding- deal structure- deal to negotiation – head of terms – due diligence – completion.

What are the advantage and disadvantage to buying a business?

There are many advantages and disadvantages to buying a business especially if it’s a pre-existing business. Some of these advantages include- established foundations, loyal customer base, marketing, sales strategy, cashflow that can be improved and grow, and easier to get funding to purchase the business.
However, there are many disadvantages to counter the advantages. These disadvantages are- capital to support an existing cashflow and you need to understand why the current owner wants to sell the company. The owner may be selling due to retirement or there could be liabilities in the company like financial struggles or operation struggle. There might even be a pending lawsuit.

What needs to be considered while buying a business?

There are many factors that need to be considered while buying a business. These factors need to be considered throughout the process of buying of a business.
Firstly, you need to consider the price, sales revenue or cash flow, age of the business, location, financial state of the business, if the property is leasehold or freehold, the physical state of the building and if the sale will be owner financed.

Additionally, you need to consider- your motivations. What business goals are you trying to achieve? This could be growing the workforce, gaining a new technology or service or it could be geographical expansion. While considering Motivation there are other factors that can motivate you such as- you will be obtaining an already established client base, you could be reducing the time investment to be set up and increasing growth, you could be building a critical mass, it’s simpler to access funding and it gives the ability to offer services or expand the depth of your current service.

Next, you need to consider your targeting. You need to specify your criteria early on and use it to access your acquisition target. Also, ensure transactions will add value to your business and is aligned with your overall strategy. Additionally, you need to target the industry and market your hoping to go into. This means you need to evaluate market trends, competition and any regulatory or legal factors that can impact the business.
Also, you need to target customer base. This means evaluating the business’s customer base, including the number of customers, their loyalty and the level of repeating business.

Lastly, you need to target the risks while buying a business. These risks are risks associated with the business, including industry specific risks, market volatility, economic factors and any potential legal or environmental liabilities.

Finally, post-transaction needs to be considered. You will need to consider what happens once the deal is done. You will need to define success through specific objectives, timeframe, notes, responsibilities and communications to your team.

However, you also need to consider the transition and integration after buying a business. This means creating a plan and execute a smooth transition and integration process. This may involve introducing new management or aligning the business with the buyers strategy.

You also need to consider the employee relations after you buy the business. You will need to address the employees, related issues that arise from the acquisitions. Communicate with employees about the change in ownership and provide necessary training and support.

Finally, you need to consider the customer and supplier relationship post-transaction. This means you need to retain existing customer and strengthen relationship with suppliers. Communicate with key stakeholders, address any concerns and ensure a seamless continuation of business operations to maintain customer loyalty and supplier support.

What do you need to know while buying a business?

When buying a business, you need to know the valuation techniques. The valuation techniques you need to know are- asset approach, seller’s discretionary earnings (SDE), price to earnings ratio (P/E), RBIDTA, discounted cash flow and comparable analysis.

Also, you need to know any finance options available. These options are – Secured and unsecured loans, debt financing, Equity financing, Investors (Venture capitalists and private equity) or friends and family.

Why use GS Verde group?

GS Verde group offers end to end support, helps identify the right targets, completing due diligence and all legal tax considerations. GS Verde Group also supports every aspect of your acquisition including saving services, tax, legal, finance tax and communication services, working as one to form a complete acquisition advisory team, working to achieve the best possible result for you.

If you want to find out more on how to buy a business visit- https://www.gsverde.group/buying-a-business