For a sophisticated investor, buying a business is often more attractive than starting one. By purchasing an existing business you acquire cash flow and profit; have an existing customer base and, generally, employees. The benefits are that you do not have to set up new procedures and structures; acquire capital goods and start from scratch. The downside is that buying a business will often cost much more than starting one and there will be additional risks associated with a new business. Many investors feel more comfortable buying a business that has a proven track record. Also, in buying a business you will receive everything owned by the business: patents, machinery, equipment and capital goods.
Sometimes business brokers are hired to locate a business that is available to purchase. Sometimes businesses become available through word of mouth.
Before buying or selling a business consult with a business attorney to review all the contracts. You will also want a competent, experienced CPA to examine the financial statements and help you with your own financial projections.
There are many complex risks associated in buying, selling and valuing a business. If you are considering buying or selling a business first consult the expert business attorneys at Givner & Kaye. (310) 207-8008