Interested in Buying a Business?

How Are Businesses Priced?

Pet industry businesses are priced by adding the value of the business to the value of the real estate (if any). Most of Teija’s listings have a real estate appraisal done at the time of listing, ensuring the Buyer that the property is priced appropriately. The business itself is valuated using standard valuation techniques; the history, profitability, reputation, staffing, occupancy, etc. create the value. Financing affects value as well, the more cash demanded by the seller, the lower the selling price; the smaller the cash requirements of the seller, the higher the price.

In how a business sale is structured, the down payment and terms of the sale are very important. In many cases, it is more important than the actual selling price of the business. Too many buyers make the mistake of being overly-concerned about the full price when the terms of the sale can make the difference between success and failure. An often quoted anecdote may better illustrate this point: If you could buy a business that would provide you with more net profit than you thought possible even after subtracting the debt service to the seller, and you could purchase this business with a very small down payment, would you really care what the full price of the business was?

What Should I Look For?

Obviously, you want to consider only those businesses that you would feel comfortable owning and operating. Pride of Ownership is an important ingredient for success. You also want to consider only those businesses that you can afford with the cash you have available. In addition the business you buy must be able to supply you with enough income - after making payments on it - to pay your bills. However, you should look at a business with an eye toward what you can do with it - how you can improve it and make it more productive and profitable. There is an old adage advising, that you shouldn’t buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner can come in and do just that. Conversely, there are also cases where a new owner takes over a very successful business and soon after, it either closes or is sold. It all depends on you!

Do I Need An Attorney?

It may be advisable to have an attorney review the legal documents. It is important, however, that the attorney you hire is familiar with the business buying process and has the time available to handle the paperwork on a timely basis. If the attorney does not have experience in handling business sales, you may be paying for the attorney’s education. An experienced attorney can be of real assistance in making sure that all of the details are handled properly. Business brokers are not qualified to give legal advice. However, keep in mind the fact that many attorneys are not qualified to give business advice.

interests must also be considered. If the attorney goes too far in trying to protect your interests, the Seller’s attorney will instruct his or her client not to proceed. The transaction must be fair for all parties. The attorney works for you, and you must have a say in how everything is done.

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