Buying an established business gives you the opportunity to take advantage of an existing customer base, which saves you some of the brand recognition building that comes with a new company. However, buying a new business also requires that you consider a variety of factors that you might not have to think about when you start a new one of your own. Here are some of the things that you need to consider if you're negotiating the purchase of a company.
Will The Sellers Sign a Non-Disclosure?
One of the challenges of buying an existing business is the fact that the prior owners will have all of the inside information about how the company operated, its products, and anything that sets it apart in the industry. If that information gets out, it could jeopardize the success of the company that you are investing in. Make sure that the sellers are willing to sign a non-disclosure to protect your company information.
Will The Sellers Sign a Non-Compete?
When you buy a company that is already established, remember that the people you are buying from are likely the ones who launched it. They know how to create a successful business like this from the ground up. Talk with your business law attorney about including a non-compete agreement in the purchase contract to prevent them from opening another competing business in your area. This allows you to protect the customer base that you are investing in.
Can You Establish A Succession Plan?
In some instances, family emergencies and other personal issues might prevent a seller from being able to spend time on a succession plan and transition. In other cases, a seller can work with you to migrate information, train you on the systems that the company uses, and review the financial records and customer information. Talk with your attorney about creating a succession plan and working with the seller for a peaceful and supportive transition.
Have You Reviewed The Company's Financial Reports?
If you have any reason to question the integrity of the financial reports or the company's valuation, you need to be sure that your attorney helps you with due diligence. You might need to hire a forensic accountant to ensure that everything is accurate before you invest.
These are just a few of the most important things to consider if you are going to buy an existing business. Your local business law attorney can guide you through each step of the process. For more information, visit a site like http://www.carterwestlaw.com or contact a professional near you.Share