Buying a company is a big enterprise and requires several levels of involvement for future investors. If you are hoping to start up prospects for buying a company there are several things that you should do well in advance of any type of move to actually execute the transaction. Here is a guide for where to start when buying a company.

Fit: Maybe the first thing to decide is part way empirical and part way gut; how does this business fit into your visions for it? That is, how are they doing now? What are their strengths and weaknesses? That will be covered more in a minute but also how do you feel about this company? Could you see yourself as the CEO of this company? Can you make this company successful? 

Inventory: The next thing you need to do when you’re getting serious about buying a company is you need to know what their inventory looks like. This includes everything they sell, all their parts and all of the things that you would inherit in their warehouse and offices. How does it all look? Is it all paid for or leased?

Taxes: You need to have a lawyer have a look at their last 5 years of taxes at minimum. You need to know exactly what you’re buying. 

Finances: How are their finances? Are they making money? Turning a profit? Or is the current owner paying out of pocket to keep the business running? Would you be able to make better choices to make the company profitable? It pays to double and triple check that last fact.

Sales: Another thing to do when you are looking at where to start when buying a company is how are their sales? How are the trends? Are their sales increasing, decreasing, or staying flat? These are things you need to know when you are considering buying a business. You also need to ask yourself if you really think you could keep up their current pace of success or turn around their struggling enterprise and if there is a desire for their products in your local market.

Liabilities: One more thing that it pays to know when you are looking at where to start when buying a company is does the current business have all kinds of liabilities due? Are there hidden liabilities somewhere “off book.” You need your seller to sign off on a full-disclosure type document and you need to back that report up with your lawyers own research. There is nothing worse than thinking that you are buying an amazing diamond rock only to find out that you actually bought a lump of coal.

Reputation: Another thing that you need to do the leg work to understand is what is this businesses reputation around town? How do people feel about this business from a customers viewpoint? Because if the only thing that keeps them coming back is the current owners, you could have a problem. At the same time if this place has got something of a nasty reputation around town and you still offer to buy them then you should do a relaunch of the operations to let people know you’ve taken over!

There are many other things to do but this is an outline for where to start when buying a company. For further help with this you will want to have a local partner who has your interests in mind. KBS Corporate will work closely with you and your team to be sure that the company you are hoping to buy is the right one for you!