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Buying Or Selling A Business

By Victoria Bowman

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Buying and selling a business and what to look out for.

If you are in the process of either buying a business or selling a business then there is a good case for involving an expert. There are plenty of pitfalls for the average business owner or purchaser that may only become clear after the event - when it is too late to remedy the situation because the transaction has gone through and the payment has been made. A second pair of eyes, particularly from someone who has considerable experience with buying and selling online businesses, or any other type of business, can save a lot of hassle in the long run. If you are thinking of either buying a business or selling a business, there are some key areas where a legal advisor can prove invaluable.

Due diligence

If you are buying a business this is absolutely key. You will need to obtain as much information as you can on the business that you are considering buying, no matter what your resources. If you are unable to understand the documents that you receive as part of the due diligence process then you may find it difficult to judge the true condition of the company that you are considering buying. You may also find that the volume of documents handed over as part of due diligence is high, or that the documents provided are disorganized, and it may be too time consuming an exercise to order and familiarize yourself with the documents. In both these instances a team of professional advisors can be very useful.

Assessing business performance

When you are considering selling a business you will need to be able to judge whether the performance of the company makes it worth the purchase price that you are offering - or whether you are asking for too little. You will need to be able to grasp the implications of changes in areas such as overhead costs and gross profits, have in depth knowledge of the company's accounts, understand your customer base and payment systems and be able to present a convincing case to support your asking price. If you are not really able to get a grip on this - and you don't bring in experienced support - you could end up selling your business for a fraction of what it is really worth.

Clouded judgement

One of the biggest unacknowledged issues when buying and selling businesses online, or in any other forum, is that often emotion can cloud your judgement. Perhaps you have always wanted to be your own boss and a company comes to your attention that happens to have your family name. Maybe it seems like a sign! At this stage, it is a good idea to bring in a third party, such as impartial legal advisors, who will be able to take a rational and practical look at the whether the company is a realistic ongoing concern.

Issues with turnarounds

Many people find the idea of buying a business that is in trouble from an administrator or liquidator quite a tempting one. Often they are cheap and perhaps you have decided that you have the skills and abilities to turn this business around and make a go of it where someone else has failed. This is a hard judgment call to make and not one that should be made without getting a second opinion. Seeking professional advice could stop you making a mistake that may cost you dear and end up with the company back in the hands of the administrator or liquidator.

If you are thinking of buying a business or selling a business then considering the factors above will help you stay ahead of the game, in terms of the mistakes that most people make. If you really want to protect yourself and make sure you have the edge then allowing a professional advisor to glance over the proposition - and to support you through the process - could save you a lot of money and heartache in the long term.

Author Victoria Bowman Future Law Solicitors are commercial Law Solicitors based in Somerset offering legal services both on and off line. Buying or selling a business

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