BIZ.for.SALE   -   Businesses for Sale

IMPORTANT MATTERS TO CONSIDER
WHEN BUYING OR SELLING A BUSINESS

As a service to subscribers we have listed some important matters that a buyer or seller of a business should consider prior to buying or selling a business.This summary is not intended to provide all that is essential for a satisfactory business transaction, but rather to draw attention to certain matters that should be considered. There is no substitute for profesional advice when concluding what may well be one of the largest transactions you will ever conclude.

Biz.for.Sale accordingly accepts no responsibility for any inaccuracies in this document and the user, by proceeding further, hereby indemnifies Biz.for.Sale against all demands, claims, costs, loss and/or damage which the user may suffer/incur arising out of or in connection with the use by the user of the information contained in this document.


 

1.   TYPE OF BUSINESS
1.1   Will the business fit your criteria in terms of price, industry and strategy?.
1.2   Is the business owner managed or management run?
1.3   What are the trading hours of the business?
1.4   How is the business housed (private company, close corporation etc.)?
 
2.   REASON FOR SELLING
2.1   What are the seller's reasons for divesting themselves of the business?
 
3.   OPERATIONS
3.1   Do you have an income statement for the last two years that will facilitate a meaningful financial analysis?
3.2   What track record does the business have?
3.3   Have you identified key customers? How would the transfer of ownership affect them?
3.4   Have you identified key suppliers? What terms and conditions of trade are in place?
 
4.   ASSETS AND LIABILITIES
4.1   Do you have a list of assets with a valuation where necessary?
4.2   Have you examined the ageing of inventory and accounts receivables and assessed the recoverability of these amounts?
4.3   Do you have a breakdown of all long term liabilities, giving details of lender, terms of borrowing, interest rates etc?.
 
5.   CONTRACTS
 
  Are you familiar with the legal agreements in respect of:
5.1   Premises and asset leases.
5.2   Distribution arrangements
5.3   Trademarks
5.4   Employees
5.5   Funding structures etc.
 
  Are there any onerous clauses that may affect the status of current legal arrangements with lessors, suppliers and financiers?
 
6.   PRICE
6.1   How was the price determined?
6.2   What terms are available for the settlement of the purchase price?
6.3   Will you be required to inject additional cash resources to fund the transition?
6.4   Have you considered the appropriateness of the valuation method?
 
7.   FINANCE
7.1   Will the present funding of the business be transferred to the new owners?
7.2   Have you taken into account the working capital that you will require to cover the initial outlays until income starts rolling in.
 
8.   TAXATION
8.1   Obtain details of the lastest assessment received from the SARS
8.2   Are there any disputes with the SARS that may impact future taxation payments.
8.3   Have you considered the tax effects of the purchase consideration?
 
9.   SOUND ADVICE
 
  You should obtain information from people knowledgeable in the field of business.
9.1   An experienced accountant with knowledge in the field of buying and selling businesses.
9.2   A legal expert to issue opinions on legal contracts.
 
10.   OTHER FACTORS
10.1   Any external factors that will effect the business adversely or positively. For example, a new road, a new shopping complex, AIDS etc.
10.2   The location of the business premises.
10.3   Is there any pending litigation against the business?
10.4     Does the business provide any guarentees or warranties on its goods and are these reflected on the balance sheet?
10.5     What is the business` cash flow cycle and it is attainable?
10.6     What accounting systems are used to record transactions and do you have knowledge of those packages?
10.7     Which employees are key to the future viability of the business?
10.8     Have you considered restraint of trade?

  Anything we left out, stuff you don't agree with.?
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