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What to consider before buying a business

| May 15, 2018 | Buying & Selling Businesses |

People who are interested in buying a North Carolina business need to be careful throughout the process of doing so. In many cases, the purchase doesn’t work out because the buyer didn’t do proper diligence or otherwise made a poor decision. During the purchase process, look out for sellers who seem desperate to get rid of their companies quickly. This is because they could ask for a sale price that isn’t justified by the company’s performance.

To determine how much a company is worth, look at how much money it is able to generate. If a company isn’t making a profit, a prospective buyer should learn more about why that is the case. Buyers who don’t think that they can find a path to profitability are encouraged to look for a different business to purchase. Furthermore, it is generally not a good idea to work with someone who claims unreported cash.

In most cases, this is just a tactic to inflate the company’s sale price. It is also illegal to hide money, which means that the seller is someone who is unlikely to be trustworthy during the purchase process.

If someone wants to purchase a business, it is generally beneficial to do so in an orderly fashion. Ideally, a buyer will gather as much information as possible prior to deciding whether to make an offer. An attorney may be helpful during the purchase process in terms of helping with due diligence. Once the offer has been accepted, the attorney can then draft a purchase agreement and other necessary documents.

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