Irvine business lawyer explains what you need to know before buying a business.
There are several steps you need to take prior to acquiring a business, but an experienced Irvine business lawyer can guide you through the complicated process. Determining if it’s in your best interests to buy a particular business, learning about the history of the company, and assessing the appropriate purchase price are some of the factors that need to be taken into consideration. Getting the information you need to feel comfortable about the decision is important.
Figure Out the Type of Business You Want to Buy
Due to the time and commitment that’s often required to own a business, you should look into companies that provide services and products you are passionate about or companies that are in an industry you already know well due to past work experience. If you aren’t familiar with a particular business or industry, you will have to deal with a steep learning curve. There’s a greater risk that you’ll make costly mistakes in the early stages of owning the company.
Assess the Competition
If you are thinking about becoming part of a popular franchise or buying a small business within a growing industry, you should analyze the competition. Find out if it’s possible for the business to be financially lucrative long-term or if the market is saturated. When there is fierce competition within an industry, it may be more difficult for you to stand out and distinguish yourself. Do extensive research about the company and its industry to learn what is required to run operations. Learn what skills you’ll need and the type of employees you’ll have to hire.
Investigate the Company’s Financial History
Research the history of the business and its financial records. Thoroughly inspect financial documents, bank statements, accounting, and payroll. Make sure the business has all of the licenses and permits it needs to operate. Confirm the business is in compliance will zoning requirements and environmental regulations. Consult a certified public accountant and legal team to ensure due diligence has been performed.
Determine the Value of the Business
Get an appraisal of the business so that you’ll know its fair market value. Analyze the company’s assets, liabilities, and other intangible factors. When you are negotiating a deal, don’t overextend yourself. You need to make sure you are able to afford the purchase price, future operating costs, and other expenses associated with the business. Clearly define the terms of the deal and the payment arrangement in a written contract that is drafted and reviewed by your attorney.
Contact an Irvine Business Attorney
If you’re interested in getting more information about buying a company and need legal assistance, a business attorney at Daily Aljian LLP can help you. Call the law office at (949) 861-2524 to schedule a consultation.