Looking to buy a small business - need help on trading figures

Jack_Flash

Hi,

Currently I'm casually looking around with an aim to buying maybe a small business. I haven't gone into much detail as of yet.

When a business says that they have certified trading figures, are these readily available and free to be issued to interested parties? What should I be looking out for in these trading figures?

Any advice would be much appreciated.

Leon11

look at cashflow, money coming in versus money going out. other people with more exp that can offer other advice

karangka

Hi Jack_Falsh,

There are many aspects you need to consider in buying a business and they depend on type of business. Have you made up your mind of what kind of business that you want to venture into?

Some people prefers to look at profit figure, some people prefers to look at the balance sheet (buyer buying to strip off the assets). Personally, I like to look at the cash flow. You can mask a profit and loss but you can't dress the cash flow. However, it is important to look at the whole picture. A business is really worth what the buyer is willing to pay for it.

Certified trading figures mean that the accounts are certified and I presume audited. Seller usually will disclose the accounts subject to the prospective buyers signing a non-disclosure agreement.

Perhaps you could shed a light on the kind of business you are interested in. I'm sure excellent helpful accountants and advisers like Kluivert and Kenny5 could offer their expertise.

kluivert

Get your accountant to undertake a due diligence report on the business for you.

Mountain Ape

I agree with kluivert - a thorough due diligence examination is essential. I would strongly advise against buying a business or shares in a company without a financial legal and tax due diligence being carried out. It may be expensive but could save you a huge amount of money in the long run particularily if there are tax or legal claims against the company.

If its a small company or business I would generally use a small chartered accountancy firm but make sure they have experience in doing DD work and ask them specifically which deals they have advised on. Most experienced firms will be only too happy to tell you which deals they have worked on.

BetsyGray

How does one go about finding small business that are for sale? Are there directories somewhere where people can advertise businesses?

thanks

BetsyGray

BetsyGray wrote: »

How does one go about finding small business that are for sale? Are there directories somewhere where people can advertise businesses?

thanks

I'll sell you a business, just send $100,000.00 to me care of western union, lagos.

Slightly more seriously there are usually plenty of ads in the Sunday Business Post. Some of these are corporate advisers selling on behalf of the owners who want to retire, scale back, don't have any willing heirs etc. Some are franchise developers who take a master franchise, get the ball rolling and then sell up once the business is established.

The other type there are the ones being sold by accountants on behalf of the courts when a company has gone bankrupt or whatever. These present interesting challenges and probably aren't for first time owners.

suckslikeafox

The due diligence advice is spot on, you'd be stupid not to

In general, you should look for a business with good fundamentals, ie strong cash flow, not too much debt and strong assets etc

wellad

is it just me or do you not have to have some experience in a business before buying into a similar business. like a barmanager buying a pub??