Buying a Business
Buying a business is a bit like doing your own dental work – you can do it, but why would you want to?
Will I inherit the office dog? What about the Leather Sofa monstrosity in reception? All valid questions.
To put it in its simplest form, when you buy or sell a business, you inherit anything that’s essential to running the business. That includes working capital, furniture and fixtures (unfortunately for some), equipment, property, contracts, vehicles and goodwill. What do we mean by goodwill? It refers to the customer base, the business’ reputation and relationship with suppliers and partners. The elements that are excluded are any personal investments or assets, long-term liabilities like mortgages or loans, taxes or anything owed by shareholders. Each business sale is unique, and the contracts drawn up are personalised to include or exclude anything agreed by both parties.
There are plenty of websites out there that reduce valuing a business down to a few easy sums. But the truth is, it's not that simple.
There’s much more involved to give you the all-important number. The main element that sets you on the right path is using someone who understands your business, inside and out. A more useful question is what affects the value of the business? Turnover, profit, debt levels, customer base, and demand all play an important role in the value of a business. But there’s also plenty of external factors that are less concrete such as market conditions and the state of the industry you’re in. In essence, valuing a business takes lots of consideration and there are tonnes of variables that influence it. A lot of businesses will need a valuation at some point – whether it’s to seek investment, to prepare for sale or to even work out how a business will be split if one of the owners decides to part ways. With our legal and corporate finance team, we’re able to assess your business, take a look behind the curtain and dig into the numbers so we can give you a realistic value for your business.
The phrase - 'how long is a piece of string?' comes to mind for this one..
But it’s a valid question that business owners will want to know before they embark on the path of selling or buying a business. In terms of the actual deal itself, it can take anywhere between 6 and 9 months. The length of time it takes varies depending on several factors. The size and complexity of the business, market conditions, the level of interest from potential buyers, and the readiness of both the seller. With the right preparation, an eye for the details and well-structured business plan, business owners can increase the chance of a timely sale. Ultimately though, the time it take is unique to each individual case.
Blowing our own trumpet
Joe Wilkinson, HEAT
I’ve been working with Accounts and Legal for a good while now, and they always impress me with their fuss-free and efficient approach to accounting. They really have their eye on the ball when it comes...