Avoiding the Pitfalls of Business Buying

Avoiding the Pitfalls of Business Buying

Buying and taking over an existing business is a grand beneficial initiative. It offers brand recognition and existing customer base as top benefits but it’s usually not without challenges, going into it and ignoring such formalities as the following:

Doing Proper Homework

Due diligence is necessary to determine whether to buy a business or not. You do a thorough examination of the business finances, understand its cash flow, customer base, available assets, and employees. Not carrying out thorough due diligence before buying the business and taking it over can adversely affect your finances and ability to grow and strengthen it.

The due diligence involves using external consultants and advisors as to the SSAC Advisory and Professionals, a consultancy arm of the highly respectable Chartered Accounting firm, S.S. Afemikhe & Co. to value the business, relying on the established belief that it’s best to hire people, who know more than you to move the business forward. They effectively cover for you all aspects of business ownership you may not think about.

Keeping to the Business Culture

Since you are not just buying the business, but the workplace, the vibe, and, in many cases, the employees, if there is a strong existing culture in place, you have two options. You either try to change it or embrace it. Where the business is not working the way you believe it should, change is not only appropriate but necessary. Note, however, that embracing the existing culture means keeping the employees as immediately bringing on new staff has its own risks. It takes time to hire, onboard, and train new employees, meaning that having a mix of new and old staff is often a smart way to go.

Understanding Why Business is Being Sold

You must clearly understand why the business owners are selling it out. Is it due to a change in their lifestyles, including a desire to retire, or the result of family growth? Is it about finances or loss of market share to a competitor?
Carrying out due diligence before doing the buying of the business would uncover some of the underlying issues. So would talking to some key or long-term customers of the firm. The hearsay conversations could reveal key information you can leverage to be successful.

Not Overextending Financially

Owning your own business could be very exciting except that it could leap one into ill-prepared financial commitments to meet, just as relying on savings and credit facilities to drive your business sometimes becomes a risky endeavor to your financial well-being.

But when commercial lending is tight, there are precious options that could be better managed for you by external consultants and advisors.

SSAC Advisory and Professionals is a consulting firm of such endowment. It supports with very gratifying services the buying and taking over of existing businesses, firmly convinced that business buying is less risky than starting a new one, particularly if it’s a well-managed, profitable business for the right price.

It believes the difficult start-up work of a business, being sold is already done with its plan and procedures in place to make an entity an immediate cash flow. It similarly sees a plus in the business’s financial history, which gives an idea of what to expect and makes it easier to secure loans and attract investors. Buying an existing business means you have acquired existing customers, contacts, goodwill, suppliers, staff, plant, equipment, stock, an established market for your products or services, and employees and managers of experience they can share.

But then, you must have it in mind that not every business in the market is a good prospect. The owners could be selling an unprofitable or under-performing business. While it’s a chance to buy and develop a cheap business, it could well be a risky investment and one that might need major improvements on old plants and equipment or a large amount of investment up front on budgeting for professional fees for solicitors and accountants. It may even be poorly located or badly managed with low staff morale or one with the effects of such external factors as increasing competition or a decline that may affect its future growth.

If a business sale is for reasons of underperformance, it would require a lot of investment to again become profitable, and where it’s successful, the seller’s personality and established relationships may well be a major success factor.

In such circumstances, SSAC assists businesses to deal with funding sources, capital structuring, and investment decisions, just as it deals with the funding (financing) of long-term infrastructure, industrial projects, and public services, using a non-recourse or limited recourse financial structure.

For business buying or acquisition, it deploys its diligence services to help buyers to review a wide range of financial, contractual documents and transactions and provide them with professional due diligence assurance, valuation, certification, and validity of the substances reviewed. It helps its clients with investigations and audits to decide on potential investments, transactions, and other business decisions.

SSAC’s transaction advisory has become legendary, knowing that making informed decisions is as important in a business as buying, selling, expanding, or restructuring, being usually a major milestone for organizations and stakeholders.

Into-to, SSAC helps to evaluate and navigate corporate transactions with services, ranging from business modeling, Merger & Acquisition, valuations, capital raising, completing due diligence reports, ensuring viability to legality of a transaction on behalf of a client. It works closely with entrepreneurs, financial institutions, and private equity groups, which it provides fully integrated transaction advisory services and realization of greater values from their transactions.

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