Evaluating a Business to Buy
9 important questions on Evaluating a Business to Buy
What are the obstacles you're likely to encounter when buying a business?
- The necessary confidentiality of transactions: you can't publicly investigate a lot of the background information.
- Few listings: a lack of businesses for sale means the seller is in control.
- Unpublished prices of previous sales: you often don't have any benchmarks or templates to follow.
- Emotional circumstances surrounding the sale: people can get more emotional about selling their business than they do about selling real estate. Blood, sweat, retirement, and yes, egos, are all involved.
How is the investigative process called?
If your financing doesn't come through or you find some dirty laundry in the business, contingencies allow you to legally back out of the deal. Making an offer and doing the necessary research are costly, in both time and money, but you'll be glad you did both after the deal is done and you can rest easy, knowing that you've purchased a good business.
What should one look for while investigating a business owner?
- Business background: request and review the owners' and key employees' resumes. Are the background impressive and filled with relevant business experience?
- Personal reputations in the business community: of course, we shouldn't need to remind you that you can't always accept the statements of others at face value. You have to consider the merits, or lack thereof, of the source.
- Credit history
- Key customers
- Key employees
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
What should one ask to the key customers when investigating a business?
- In general, how is the company perceived by its customers?
- Does it deliver on time?
- How do its products or services compare to its competitors offerings?
- Does it have a culture of integrity?
- What does the company do best?
- What does it need to improve?
How can we discover why the current owner is selling?
- Chat with the owner.
- Talk to the business owner's advisors.
- Confer with industry resources.
- Seek out customers.
- Discuss with employees.
In your discussion with and investigatiosn about the current owner, also reflect upon these final, critical questions:
- How important is the current owner to the success of the business?
- What will happen when he or she is no longer around?
- Will the business under new management lose key employees, key customers, and so on?
Why is it important to understand the company's culture?
When you buy a company, you should maintain the company as it had been run until you've studied and learned its real strengths and weaknesses, know the business well enough to recognize the skills of the employees, and could formulate an informed plan to move the company forward.
What is an excellent way to uncover inflated profitability as reported on the financial statements that the current business owner shares with you?
Warning: If you discover that the business owner has overtly tried to cheat the government, chances are he may try the same thing on you.
How does one uncover lease contract terms?
- Check comparables - that is, what similar locations lease for - to see whether the current lease rate is fair.
- Talk to the building owner to discover his plans.
- Ask for and review (possibly with the help of a legal advisor) the current owner's lease contract.
- Pay extra-careful attention to the provisions of lease contracts that discuss waht happens if the business is sold or its ownership changes.
How do we evaluate special franchise issues?
- Thoroughly review regulatory fillings.
- Evaluate the franchiser's motives.
Try our study magic for free
a PDF, study it super fast
- No sign up, email or credit card needed!
- AI makes unlimited flashcards
- Get unlimited quizzes and tests
- Ask AI anything
- No sign up, email or credit card needed!
- Have and keep perfect overview
- Make flashcards, notes and mind maps
- Review, test and score!
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
