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How to acquire a small business

On Behalf of | May 19, 2016 | Mergers & Acquisitions

Growth is hugely important to Manhattan entrepreneurs seeking to make their mark on the business scene. Acquiring an existing business is a great way to foster such expansion, but should be approached cautiously to ensure that the purchase makes sense from both the financial and growth perspectives.

The U.S. Small Business Association offers a list of what steps business owners must take when looking for a new commercial entity to purchase. Performing proper due diligence is key in this respect, as there are many considerations that must be made. For instance, being up-to-date on all applicable zoning laws is a must for a business to remain in compliance to avoid incurring penalties. Business owners should also investigate what sort of licenses and permits relate to their specific undertaking.

Thorough research can be important as well once an attractive business prospect has been identified. Financial statements (accompanied by an audit letter issued from an independent accounting firm) spanning from three to five years must be looked at closely. Establishing the monetary value of a business should also factor into the decision. This can be accomplished by tallying up any real assets a business owns, or determining the business’s return on investment.

Entrepreneur also offers a few helpful tips on acquiring a new business. The physical structure itself should be surveyed, including things like existing equipment and fixtures. This will help determine the amount of money necessary to keep the facility in good working order. Location is another important consideration business owners should make before finalizing a deal. Determining the existing demographic as well as the direct competition in the area will establish whether the business offers a lucrative opportunity.



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