The process of buying a business can be daunting. Sometimes buyers forget to ask important questions and, as a result, do not get important details to make an informed buying decision. These questions can also provide insight for the business owner who is looking for the right buyer for their business.
One important inquiry that should not be overlooked is what is included in the sale of the business. A buyer cannot assume that they are getting all the assets of the business. All assets included in the sale must be thoroughly qualified and documented. The buyer needs to know exactly what they’re getting for their investment. These assets include tangible assets, such as inventory, supplies, equipment/machinery, and real estate, as well as intangible assets, such as proprietary materials and intellectual property. Intellectual property has become an increasingly valuable asset in today’s business. Buyers should ensure that patents and copyrights, trademarks, software, company names/designs/logos, and automated processes are included in the sale because the success of the business can depend on these.
Another important inquiry that should not be overlooked is the potential for growth. Many sellers will provide ideas and strategies for growth. The buyer should know ahead of sale if the business has limited growth potential. The buyer should also think about the working capital needed not only to run the business, but also to make necessary changes.
Lastly, the buyer should inquire about the staffing situation. How dependent is the business on the current owner or manager? How experienced is the management team? How long have the employees been working for the business?
The due diligence process of buying a business provides for these and other inquiries to be made and for the business to be properly vetted. Buyers need to do their part…..speak up, ask the right questions, and clarify as needed. When businesses are properly vetted, buyers will be ready to sign on the dotted line and they will be more successful.
We are always looking to help people with the sale of their business. We offer services in a professional manner with a consultative, individualized approach. For more information or to receive a complimentary consultation, click here.