Buying a business can be both exciting and nerve-wracking. There are many steps involved, from reviewing contracts to handling employee matters. One of the most important factors is determining an accurate value. This helps you make sure you are paying a fair price.
Business valuation can be a complex process that varies depending on the type of business, the size of the company, the goals you are trying to achieve, and a long list of other factors. Although valuation can seem overwhelming, an experienced business lawyer can help you take the appropriate steps. The following are several items you should keep in mind when putting a price on your acquisition.
What Is the Current State of the Business?
One of the first places to start is determining the current state of the business. Where do things stand now? Is the business on the brink of bankruptcy? Is it losing customers to a competitor? Before you make an offer, take a close look at the following:
- The company’s sales and profits
- Any debts
- Cash flow
- Real estate, including buildings
- Employee turnover
- Reputation, both online and in the community
Also thoroughly investigate the seller’s reasons for putting the business on the market. This can be a good indicator of the business’s value. For example, if the seller is nearing retirement age and simply wishes to move on, this can be a good sign that the business will thrive under new ownership.
On the other hand, negative factors should not necessarily deter you. A business with a poor reputation or dismal financials can still be an excellent buy. This is where your business lawyer can help you determine whether your investment makes sense and what you can expect once you take over. Your lawyer will help you conduct a detailed review of the business’s profits, losses, expenses, and financial statements.
Does the Business Have Any Intangible Assets?
One area prospective business owners often overlook is intangibles. Intangible assets can include anything from reputation and licenses to goodwill and intellectual property. In today’s marketplace, intangibles can make or break a business. Your attorney can help you research whether the business has any intangible assets and how much they are worth. This is especially important in a sale situation, since a change in ownership can have a significant impact on intangible assets, such as relationships with vendors and customers.
Speak with an Experienced Mississippi Business Lawyer Today
Whether you are considering purchasing a new asset, or you are looking to protect your business, we can help. At Rushing & Guice, P.L.L.C., we help business owners safeguard what they have worked so hard to build. Call us today at (228) 374-2313 to discuss your case.