Mergers & Acquisitions Advisory

A Neumann & Associates, LLC

October 6, 2020

Five Things to Consider Before Purchasing an Existing Business

By Achim Neumann

business valuation meetingStarting a new business from scratch can be difficult for some entrepreneurs. Sometimes, it could prove to be a better strategy to purchase an already established company.

You will be saving time and money on setting up initial regulatory, branding and operational processes that any new business requires. You should also do serious research about the business you’re looking to purchase and negotiate a the best deal possible with the seller.

This is most certainly not a simple process, as there are numerous potential challenges ahead of it. We’ve selected five core considerations that are essential to someone who is buying an already existing company.

#1. Know yourself

A new entrepreneur needs to know what his innate skills and flaws are before running a successful business.

Knowing your previous experiences and growing a personal connection with the business are essential as it helps defining what needs improvement and how much time is needed to invest in it.

It’s always more exciting and motivating to be a part of something you believe in and have significant knowledge of.

#2. It’s for sale for a reason

It’s not uncommon for business owners wanting to move on and retire. However, sometimes there can be more to it.

Do your own research. Discover a bit more about their employees, customers and competitors. See if there are any struggles with the business’ public image, operational processes and the impact of a potential change of ownership.

This step requires you to speak as much as you can with the current owner, and everyone related. Only make a decision after expressing your concerns and doubts and getting meaningful answers.

#3. Go after comprehensive financial and legal information

This will require you to research even deeper and broadly than above. Ideally, you want to follow this step only after you’ve made your personal decision to purchase a company, as it requires additional time and financial resources.

Always hire trustworthy and credible accountants, attorneys, insurance and business brokers to make sure there’s no corner-cutting or potential irregularities in the pre-purchase analysis and the subsequent business transfer process. Working with professionals is the best way to hedge against potential investment, reputation, regulatory and operational risks.

#4. Negotiate

It’s natural that the buyer and seller have different views regarding how much the company is worth. However, with the assistance of a respectable business broker, you can have better leverage on the negotiation, and reduce tensions with a third-party mediator in between, who can also provide a thorough business valuation that will clarify what the company is worth in terms of current markets.

All details must be settled in the final sales agreement, primarily the final purchase price. Other important aspects, such as cataloging all assets, reviewing copyright and intellectual property information and up-to-date customer lists should be taken in consideration before claiming ownership of an existing company.

#5. Consider hiring a Business Broker

This should be only a brief overview of what someone should consider before buying a company. In reality, however, there are many extra and intricate details that can make the entire process more complicated and lengthier, especially if it’s your first time buying an existing business.

You should consider getting expert help on the matter. Dedicated professional business brokers can assist with the entire purchase process, from understanding what kind of business best fits your experience and expectations, to mediating negotiations to make sure you get the best price. With this, you no longer will have to worry about the small details and instead focus on the purchase itself, confident that a professional will take care of the rest.

About A Neumann & Associates, LLC

A Neumann & Associates, LLC is a professional mergers & acquisitions and business brokerage firm having assisted business owners and buyers in the business valuation and business transfer process through its affiliations for the past 30 years. With an A+ Better Business Bureau rating, the company has senior trusted professionals with a deep knowledge based in multiple field offices along the East Coast and has performed hundreds of business valuations in its history. The firm’s competitive transaction fees are based on successfully completing transactions. For more information, please contact A Neumann & Associates at 732-872-6777 or info@neumannassociates.com

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Colby Harris, Co-Owner, Del Mar Designs

“Claus Madsen thoroughly helped us with selling our company. From the 1st introductory meeting explaining to us what was possible, to providing us with resources to assist with the sale. Claus was invaluable throughout the whole sales process. Claus was with us every step of the journey and always made himself available for any questions or issues that came up along the way. If you are interested in selling your business, I encourage you to reach out to Claus and the ANA team so that they can let you know what’s achievable. These guys will make it happen!”

Ron Harris, Co-Owner and Vice President, Del Mar Designs

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James Belanger, Business Owner

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Andrew G., Investor

“We worked with Neumann & Associates to investigate the purchase of a research company in 2010 and found Achim to be capable, forthright and realistic. His depth of experience enabled us to fully understand our options, offering creative options that might enable the acquisition. While we didn’t acquire that particular company at that time, we know exactly who to call whenever we’re looking to buy or sell a business.”

Daniel Coates, Buyer

“Purchasing a business through this firm was a pleasure. Gary was very professional and transparent throughout the entire process. I look forward to working with A Neumann & Associates in the future.”

William Klemens, Buyer

“I utilized A. Neumann & Associates to assist in an M&A process. They are VERY thorough in using their time-tested process to calculate the value of investment opportunities, a process which provided a very detailed explanation for the value of the potential opportunity. Additionally, they also went above and beyond to extend other services including connecting with others who specialize in your industry and can assist with necessary steps including legal and accounting. Highly recommended!”

Edward Lane , Business Owner

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Achim, who explained the process in detail. He had his colleague Gary come to my office in order to get a clear understanding of my business, and what I was hoping to accomplish. His patience in answering all my questions and his knowledge of the proper way to market my business gave me great confidence that this is the firm I will be using when the time comes for me to sell my business for max value. They gave me great insight into the steps I need to take now to get the best deal in the future. I highly recommend this firm to anybody who wants to sell now or down the road. They not only know their stuff, their actually just real nice guys.”

Robert Kardane, Business Owner
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Contact A Neumann & Associates, LLC

If you are considering selling your business, please contact us to learn more about our comprehensive service spectrum. Our experienced professionals will answer all your questions about selling a privately held business in complete confidentiality. Please fill out our contact form, or call us at 732-872-6777. We will contact you directly and will never identify ourselves to your employees.

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