Purchasing a business for the first time is an event which requires a lot more preparation then writing a check to a seller. It requires patience, preparation, due-diligence, and most importantly a solid team of attorneys and certified public accountants. No matter how small or big the business may be, the most important aspects to consider are listed below.
1) Identifying a business through a business broker/agent that is for sale:
Purchasing a business a very significant event- we can it an event because it has many facets to it that encompass preparation and work behind the scenes to effectuate the transaction. Registrations, licenses, permits, and government authorizations are steps in the process of identifying the various hurdles we must overcome.
2) Making a Team of Professionals on your side:
Hiring a New York litigation attorney and New York based Certified Public Accountant should be among the very first steps before you decide to go forward with both negotiations and valuation of the business. Business attorneys work hand in hand with CPAs to both valuate the business's finances, as well as its potential liabilities- all of which are negotiation points at the purchase table.
3) Financing the business either with SBA loan or privately:
Obtaining the necessary funds and commitments from commercial lenders is essential. Identifying individuals within the institutions who will aide you through the process is very valuable. CPA's and your litigation attorney can assist with preparing all requisite forms and applications.
4) Contract and Due-Diligence Phase:
Contracts for the purchase of a business can be either in the form of an asset purchase agreement or a stock purchase agreement. Depending on the type of business being sought to the purchased it should be determined which for is the appropriate one in which the transaction should be conducted. The preferred choice is generally the asset purchase agreement which aims at minimizing unknown liabilities. Conducting a complete financial review along with your accounts of the financial statements is one of the most vital aspects of the transaction.