- Is it a motivated seller and why?
- How much debt does he need to pay off? (mortgages loans?)
- How much cash does the seller immediately need?
- Does he need that cash all at once?
- Is he looking for a way to avoid capital gains? Or reduce or spread out his tax liability?
- Are there other family members involved in the decision making process?
- Has the reputation of the company been damaged at all?
- How dependent has the business been on the current owner? Relationships with employees? Customers? Vendors?
STRATEGIES TO CONSIDER WHEN BUYING A BUSINESS
- Consider buying on installment
- Don't ever be shy in asking for information- your strategy is to "discover" as much as you can
- Consider holding back some of the purchase price until after closing- say six months or a year in case you suffer a loss due to the owner failing to "disclose" information
- Consider buying land in one deal and the company in another- if the two are indeed owned separately
- Consider and 'earn-out' provision where seller only gets paid if certain financial milestones are met
Featured in the Daily Herald Business Section