Instructions for buyers
There are many good reasons to buy a business. Buying a business is a viable option even for someone beginning their entrepreneurship. If the acquisition is expertly handled, there are no surprises and business operations can commence immediately. Customer flow and invoicing aren’t interrupted. The money which is spent on buying the business could easily be spent on marketing a new business, acquisitions and establishment costs, but the results would be uncertain. Actually, starting a business isn’t much cheaper than buying one, when taking into account that the future of a new business is completely uncertain and all customers must be lured away from competitors. The risks of starting a new business are greater than the risks of buying one.
Buying a business gives you as a buyer access not only to the business’ customer base, but also to valuable information about competitors, purchasing, advertising, customers etc. Many steps related to starting a business are skipped as well, which makes commencing business operations quite easy and fast. A broker with expertise can help you plan and develop business operations, and sellers are often willing to help the new owner succeed. A business acquisition is successful, when all parties are happy with it even years later.
Find out why the business is being sold
The most common reason for selling a business is the entrepreneur retiring. Other common reasons for selling are switching industry, simplifying the operation, frustration, sickness, the departure of a business partner and disagreements with family or partners.
If the decision to sell is independent of the business itself, related to the entrepreneur’s age or sickness, the situation is generally favorable for the buyer. Even an unprofitable business shouldn’t always be abandoned. At times, it is clear to see that the seller’s character or lifestyle cause a good business idea to be unprofitable. After a change of ownership, such a business can flourish like never before.
Always make a safe acquisition
A business acquisition is a multiphased and multilevel process, in which the help of an expert is to the benefit of both seller and buyer. A business acquisition can’t be compared to real estate acquisitions, because a part of the factors affecting the acquisition will always be based on subjective estimates, tax planning, method of payment, the manner in which the acquisition is executed or even predicting the future. Only a few of the factors affecting business acquisitions can be unambiguously measured or defined. At the time of an acquisition, businesses might entail unknown risks, against which the buyer can protect themself with good contracts of sale. The broker’s job is to make the transaction transparent and honest.
From the broker’s point of view, the buyer’s, seller’s and financier’s satisfaction are equally important. Today’s buyer is tomorrow’s seller. Acquisitions aren’t made without financiers and a happy seller is the best reference to other potential sellers. In order to minimize the risks of a business acquisition, the brokers of Suomen Yrityskaupat use the know-how of our whole organization when needed. This means that neither buyer or seller have any unanswered questions when the transaction is made, and it can go through safely.
The safety of the acquisition is also guaranteed by contract models developed in the real world for the purposes of business sales and acquisitions as well as meticulous preparatory work. Did you know that the bulk of the broker’s fee comes from familiarizing themself with the business, analyzing it and preparing the sale? This work is done specifically to the benefit of the buyer.
A professionally skilled business broker guarantees the reliability of the transaction’s both parties. The broker is involved from planning the sale method to determining the price, tax planning, arranging financing and developing business operations. For instance, this ensures that the selling price is reasonable for the buyer.
A business broker’s valuation is always based on reaching a situation, where the sale is actually possible. If no sale is made, the broker goes broke. This is sure to happen if the business’ valuation is unrealistic. This is why the broker must always strive for realistic valuations. A provision based commission encourages the broker to find a buyer, who the business is most suitable for.
The biggest risk for an entrepreneur is to buy a business from directly from another entrepreneur without professional help. These are the kind of acquisitions that lead to the most backwash. There are a great deal of things in business acquisitions that can disrupt the whole business when ignored. The broker’s job is to refine the business, so that both parties are aware what they are selling or committing to. The broker is also better equipped to determine the selling price than sellers, who have executed the occasional business sale. In addition, the broker protects you from frauds. We don’t deal with double-dealers: our business is based on continuity, not on making deals at any cost.
Find a company suitable for you
Small and medium sized businesses don’t have market prices. Seemingly similar businesses can be very differently priced. The rule is that the larger profits or the longer payment time, the higher the price. Business acquisitions are mostly paid for by combining credits from banks and Finnvera, own money and the payment time set by the seller. A broker can help you with these issues as well. The right price is the price that makes the transaction happen. A price determined by an expert broker rarely comes down, unfortunately. One can always try, of course.
The most important thing is to find a business that fits your life situation, goals and wealth, and which you are able to run. It is better to choose a business, which is the starting point of your dreams, not the goal. Every entrepreneur writes their own story with their business anyway. It is better to buy a business, which you can take forward with your own abilities than buying one, which operations you’re currently barely able to cope with.
You’ll find the most potential targets in discussions with a broker. However, the broker won’t reveal everything about the business based on first contact. The broker actually has tens of businesses for sale that can’t even be seen in our public marketing. This might seem strange, but in the end it is also to the benefit of the buyer.
The broker’s job is to based on the conversations find buyers with real intent to buy and find the most suitable businesses for them. When the acquisition is further along, the buyer receives all necessary information about the business: nothing is kept secret. This is not necessary in the preliminary discussions, which are held with tens of potential buyers. From the viewpoint of the final buyer, it wouldn’t be good if information about the company was uncontrolledly shared with all interested parties. This means that non-disclosure agreements and the delivery of information in stages are also to the benefit of the buyer.
You can also commission our broker to search for the kind of business you’re looking for. It’s always worth asking if they’re aware of one that might be coming for sale or if one is being sold quietly. The broker is a professional, whose professional skills help you make decisions. Conversations with a broker are always confidential, which means it’s always best to be completely honest. The broker will also tell you if the target is suitable for you or not.
