Updated: January 24, 2023
Statistics reveal that approximately 25 million individuals in the country have started their own businesses since 2015. While there are some substantial benefits to be realized by operating your own business, it can also be challenging and full of obstacles.
For people who are considering buying an existing business, it is particularly important to perform sufficient due diligence before making your final decision. By understanding what obstacles to anticipate following purchase of a company, you enter into the deal with the best chance at success. Before making a business purchase, it is best to speak with an experienced business lawyer.
Understand the Company’s Financial Situation
Before making a purchase, it is critical to take stock of a company’s assets and liabilities. If sufficient effort is made concerning these details, you will know all you need to about the company’s operation including its overhead expenses and profit margins. You might feel poorly equipped to make this decision or overwhelmed by all the financial information. Fortunately, in these situations, an experienced business law attorney can help you determine the best next steps.
Assess the Company’s Value
The amount you spend to acquire a new business will depend on a number of complicated factors. Many business uses a market-approach valuation, which compares the company’s financial worth to that of other competitor businesses. Other companies, however, use an asset-based valuation, which does not take a company’s current market situation into consideration but instead examines a company’s existing assets.
Be Honest About the Company’s Legal Issues
In addition to analyzing the company’s financial situation, it is also critical to perform a detailed examination of any legal issues. Outstanding legal issues have a profound impact on taxes and can impact land ownership, among other things. Make sure to collect all important information about a prospective company’s legal standing. An experienced business attorney can prove invaluable in making sure a company does not pose a legal liability.
Speak with an Experienced Business Law Attorney
Although due diligence can be particularly time-consuming, it is the best way to avoid making a costly business mistake. We have helped many clients navigate complicated business decisions and we know what it takes to make sure that your business purchase is as successful as possible. Contact the Monahan Law Firm PLC today to schedule your initial consultation.