Articles

Part 13: Evaluating Business Assets

The Seller must provide a full list of all the Business Assets included in the sale, fixtures and fitting, equipment, vehicles etc. with a value. But what value does one use? Is it the depreciated book value, the present replacement value, or an estimated forced sale...

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Part 12: Avoiding purchase pitfalls

In most transactions, the Buyer and the Seller see staff as part of the business without giving much thought to their importance.  Staff are not bought and sold at the purchase price.  They must agree to accept the new owner.  If their working conditions are going to...

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Part 11: Keep a sharp eye on the value of your stock

Stock is the lifeblood of a business, but it can cause all sorts of problems when a company changes hands, mainly to the detriment of the buyer.  Obviously, some types of businesses, such as garden services, do not have any stock and therefore don’t have these...

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Part 10: What does net profit really mean?

In small to medium-sized businesses when we talk about net profit, what we really mean is that the net profit Plus the total of all the perks the owner derives from the business. Unfortunately, many of these perks are not legitimate business expenses and are therefore...

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Part 9: Mind Your Own Business

So often in the process of buying and selling a business, either the buyer or the seller gets confused with the aspects of mark-up and gross profit, sometimes with disastrous effects. The importance of understanding the difference can be seen in this simple example:...

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Part 8: Confirm Sales Before Buying

Turnover or sales is the second biggest problem area for the buyer to overcome.  Not only must he be able to verify that the business is doing the turnover claimed, but that it will continue to after the seller has left.  Most other sections of the financial side of...

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Part 7: Check Your Lease

Once you have selected one or a small number of prospective businesses to buy which meet basic requirements, the time has come to look in more depth at various aspects of their operation. The lease on the premises There is a very true saying “If you don’t have a...

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Part 6: Narrowing the Field

To save yourself endless trouble selecting the right business to buy, prepare a checklist of likes and dislikes, wants and don’t wants.  Earlier in this series, we looked at preparing a personal prospectus. Use it to screen unsuitable businesses. There could be...

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Part 5: What Good Brokers Really Do To Help You

Business brokers These people a seller would approach to sell their company – are first cousins of estate agents. We fall under the Estate Agents Act and they must be registered with the Estate Agents Board and hold a fidelity fund certificate. We work on a commission...

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Part 4: Sellers In For Big Surprise

Everyone who owns their own business believes their little empire is a gold mine.  Never mind that it isn’t making any money, when the time comes that they want to sell it, they firmly believe some “naive little buyer” is going to come along and pay them an enormous...

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