The first step on the road to business acquisition is the preparation of your offer. Often it takes many rounds of negotiation to agree on a price for a small business, especially if you and the current owner have very different valuations of the company. Since Milton Keynes is situated so close to the outskirts of London, you can expect the property prices here to be higher than in other areas of the country. However, this shouldn’t mean that you resort to paying over the odds.
Hiring an accountancy firm to put together an acquisition plan for you can help you work out exactly how much you can afford to invest. A skilled accountant will be able to give you a stronger idea of the maximum amount you should spend, as well as providing financial projections for the opening period. Once you have both your projections and acquisition plan in place, then you will be able to negotiate towards a more viable offer.
With your own finances in order, it’s important that you find out exactly what shape your target company is in. Unless you’ve offered them a figure they can’t refuse, then there’s probably a very specific reason why they’re selling. It may be that they’re looking to move on to new ventures or prepare for retirement, but there’s also a chance that their small business is floundering.
In a process known as due diligence, an accountancy firm will be able to analyse the accounts of the business you are looking to take over and determine their financial position. During this audit, your accountant will look at all the possible business variables, including expected revenue and profit margin trends. From this, they will be able to tell you how much work you will need to put into the business and how long it will take you to begin making money from it.
Whilst tax efficiency is more an issue for the seller to deal with, it is still worth bearing in mind when buying a business too. The seller will want to ensure the deal is as tax-efficient as possible for them, in order to avoid losing capital. This can result in a long, drawn out process as the current owner looks to move money from the business into their personal accounts.
A small business accountant can help you decide when the best time to buy a business might be, based on the tax needs of the seller. They can also work with the seller’s accountancy firm to ensure the process is as fluid as possible. If it’s likely to take more than a few months for the seller to get their finances to order, then an accountant can ensure you don’t sit around idly, waiting for things to move forward.