Doron F. Eghbali Closely Held Business Law Blog on Lawyers.com

How to Buy a New Business

Friday, January 15, 2010 by Doron F. Eghbali

Nowadays, it is not easy to buy a business given the very tight credit market and uncertain financial climate. However, you might come across great deals at a bargain. So, how would you approach such deals?

1. DO YOU LIKE THE BUSINESS?

Probably, the most important barometer in buying a business is how you like it. Whether or not you want to personally manage the business, the likability factor makes it easier to spend money or make tough decisions with prudence, if you like it.

2. DO YOU KNOW THE BUSINESS?

Knowing the business primarily means:

Knowing how long the seller has owned it.
Knowing how the business is performing.
Knowing why the business is being sold.
Knowing how to get clients for that business.
Knowing how many percentage of existing clients will stay.
Knowing how to promote the business.
Knowing how to run the business.
Knowing how to intelligently spend and prudently invest.

3. DO YOU KNOW THE VALUE OF THE BUSINESS?

Knowing the value of location of the business.
Knowing the value of inventory or services.
Knowing the value of already trained employees.
Knowing the value of established customer base.
Knowing the value of cash flow.

4. DO YOU HAVE REALISTIC EXPECTATIONS?

Knowing you can finance the business deal.
knowing you feel like a loser in the beginning.
knowing you must have a financial cushion to absorb the expenses.
knowing you must live and absorb costs in the beginning.

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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. He Primarily Practices Business, Real Estate and Entertainment Law. He Could Be Reached at 310-651-3065 or doroneghbali@LawAdvocateGroup.com. For More Information, Please, Visit: www.LawAdvocategroup.com.

Posted at 14:17 PM

Topic: Closely Held Business Law