So have you browsed through a number of business for sale deals and chosen that one business that you want to buy? If yes, then now you may want to draft a proposal to buy that business. But if you are anxious about writing an offer by yourself, there are many professionals in Canada who can help you create the best professional offer.
Where the Problem does lies?
The problem lies in the fact that the owner of the business of saledoes not want just any buyer looking through the private sensitive financial records of his or her business. Not every interested buyer would be serious about the acquisition. Some of them may just be the time wasters. While some of them may not be financially capable to acquire the business. The owner of business of sale will get all sorts of interested parties. He or she will use all possible methods to decide about the really interested and monetarily capable potential buyers.
So to make the owner of the business of sale notice your interest, you should draft the best offer. While writing an offer, keep in mind all the strong and weak points of the business you want to buy. Given below is a list of things you should do before creating an offer:
Collect The Essential Financial Information
Ask the seller what exclusive information he or she will share with you. Talk about the information for example financial reports, tax returns, financial plans, salary structure, commissions paid, licenses, certificates, and fee payments. However, be ready to sign a NDA, non-disclosure agreement. Once the NDA is signed, only then the business seller will share the private information of the business with you.
Assess The Tangible Assets Of The Business.
Tangible assets include both fixed assets and current assets, such as land, buildings, machinery, furniture, equipment, cash, bank balance, securities, inventory, other receivables, and many more. The value of these tangible assets will help you estimate the right value of the business.
Identify The Value Of Intangible Assets
Procurement of a business can be a complicated procedure, as there might be some intangible assets of the business that can play an important role in success or failure of the deal. If you fail to estimate the values of intangible assets like goodwill, patents etc. it might bring a vast difference between what you will be expecting, and what you will get. The intangible assets can make the huge difference to the value of business of sale in Canada.
Examine the overheads
Ask the business owner if the business for sale has any overall budget plans, or different manufacturing cost procedures and overhead plans for different departments. That way you can look for the opportunities where you can remove or reduce the expenditures, and increase the overall net profits of the business in future.
Assessment Of The Profits And Losses
Evaluating the potential of business through past years’ profits is another significant step when arranging the purchase offer. There are several methods like multiplier methods for appraising the future prospects of the business for sale in terms of profit. That way you can make sure that you get the best deal possible. Also, determine the profits of the business for the last 3 to 5 years that is if the business had been running for that period of time. Observe the ups and downs in business performance in last 12 -18 months in order to detect the cause for any rise or fall in profits.
Hire A Business Broker
Once you have completed your research regarding the values of different aspects of the business, hire a business broker to help with detailed analysis of your research. You can find a number of business brokers inCanada, based on your requirement and your physical location. Tell the hired broker to assess the facts and figures you have gathered and search for any assets, liabilities or expenditures you have overlooked. Ask the broker for an accurate multiplier number for businesses in the sector you are preparing to buy.
Discuss The Terms With Key Personnel
If you are planning to run the business, talk over with the owner about which staffs are vital for the success of the business and accordingly plan which staff people you would like to retain and how you would achieve it.
Prepare An Offer To Purchase The Business
While preparing the offer, list all the tangible and intangible assets that will be handover to you. Take account of stock and receivables, and other elements of the business that will affect the pricing of the business. Comprise the offer price and payment terms, and how you would be financing the deal. You can use the services of online hubs like Business Buy Sell to purchase a business and know about other things associated with it.