Newspaper article THE JOURNAL RECORD

Targeting Your Potential Business Purchase

Newspaper article THE JOURNAL RECORD

Targeting Your Potential Business Purchase

Article excerpt

Sometimes finding the right business is more difficult than running it.

Before you make any decisions, identify your reasons for wanting to buy a business, what you are willing to invest and your expectations.

There are two major ways to find a business to buy. One is to do the hunting yourself. Get a list of companies in your target industry, the people who run them and their phone numbers. Your best opportunity is with a company that has not been listed for sale with a broker. Call the CEO or owner and explain that you are representing yourself and are interested in buying the business. The second way is to use an intermediary -- a paid adviser or a broker. I recommend an adviser or buyer's rep who charges a flat fee. If you use a business broker with listings of companies for sale, be aware of the potential conflict of interest. In most cases, the company that lists businesses has a fiduciary responsibility to get the highest possible price for the sellers. How then could the broker fight for the lowest price for you? Too, if a broker has a listing on a company, will he or she try to push you toward that company or toward unlisted companies that require cold calls to discover if they are for sale? Because of the major difference in financial rewards to the broker, he has an incentive to push for the company listed with him. As a buyer, you are better off using a company or individual that represents buyers exclusively. That way you can avoid potential conflicts on the part of the brokerage firm. When you bid for a company, you may well be competing against existing companies willing and able to pay a premium price. They may pay an especially high price for a competitor because they may often increase sales without increasing their corporate overhead, or they can increase prices because of the reduction in competition. …

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