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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Client Testimonials

“ I appreciate your diligent approach to screening buyers and sellers as well as the high quality CIM that you produce.”

Andrey O, Investor

“Finally enjoying retirement after recently selling my business using the services of A Neumann & Associates. Joe Oddo provided the conduit to a successful transaction. Joe knew when to inject input and when to simply listen and allow the buyers to vent, step back and regroup. The outcome met our expectations and got us to the finish line, which included my staying with the company six months in order for the buyers to get their footing and keep our workforce in the loop. He helped at every step by providing his expert guidance & resources. Thank you!”

Emily Parker Myers, Co-Owner - Myers McRae

“I had been in touch with Karin and Gary from A Neumann & Associates regarding some opportunities and was looking forward to meeting with them. Hence, when they organized a seminar in Princeton, NJ, I was quick to sign up. The seminar was very informative as the team walked the attendees through various scenarios and referenced real life buying/selling situations they had been through. The sessions by Gary, Karin and Achim were crisp and focused and brought clarity to potential seller and buyers. I strongly recommend the team and look forward to continue working with them.”

Gaurav Tyagi

“Thank you for your Event on "How to value, Sell, and Buy A Business for Maximum Profit" and the insight into ANA’s approach on what is involved in the Business Exit for sellers. Garys Hervieiou's "Business Valuation", Achim's "Deal structure" presentation and Karin’s "Preparing the Package" are real street knowledge shared. They answered attendees questions which makes it more interesting for learning from others. Great for small businesses like us. The presentations were totally worth our time and travel for the event to Princeton, NJ from Rockville MD. Ravi Bhutani, President, CIPS”

Ravi Bhutani

“Gary, this is to thank you for an excellent job done in selling our business. We could never have done it without your professional expertise, dedication and time put in without reservation to make it happen. We will gladly and highly recommend you to anybody in our position.  It was a pleasure to work with you.”

Pat Iammatteo, Owner

“Your vetting is simply outstanding, among the best I've seen from a broker.”

Eric H., Investor

“I recently contacted A. Neumann and Associates about getting a valuation of my business done. I spoke with Marc, who explained the process in detail. After meeting with Marc 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 to sell my business for max value. Working with Marc at A Neumann & Associates was very easy and professional. I did not know all that was going to be involved in selling my business but they helped me through the process. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. I highly recommend this firm to anybody who wants to sell now or down the road. Marc not only knows his stuff, but actually is a real nice guy.”

Double Diamond

“Used A Neumann & Associates to sale my business. could not imagine having done it with out the patience and experience Gary provided. Thanks Gary,”

Dennis Frazier

“Working with Marc and his company was a pleasure. What I thought was going to be a just another one of those pushy sales companies was just the opposite. Polite, knowledgeable, and a pleasure to talk to and deal with. Marc handled most of the interaction and he has one of the greatest demeanors. Again, it was a pleasure working with him and his firm.”

Douglas DiCeglio

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Srini Mudambi
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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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