Purchasing a Business
BUSINESS ADVICE FROM CPAS
Buying a business requires a considerable amount of time, effort, and resources. Competent, professional advice can save you valuable time and money in the process, and:
EXPEDITE THE COMPLETION OF THE TRANSACTION.
When buying a business, a certified public accountant (CPA) can assist you in successfully completing the transaction.
IS BUYING THE RIGHT DECISION?
Businesses are purchased for a variety of reasons. Buyers may look to acquire a business to reach a certain goal, such as entering a new market, broadening a product line, diversifying their holdings, or just meeting specific targets.
Regardless of your reason for buying a business, you should carefully consider all available alternatives before making your decision. Developing the resources internally or acquiring specific assets may be options to acquiring a business. Your CPA can help you explore these and other alternatives and can assist you in making the right decision.
THE PROCESS OF BUYING A BUSINESS
The process of acquiring a business can be simple or complex,
depending on the transaction. It is important for you, as a buyer, to
generally understand the process so that you can make informed
decisions. Although it will differ depending on the circumstances, the
buying process basically consists of the following phases:
Before buying a business, identify your goals and evaluate the expected benefits. You should consider what you want to accomplish and how buying a business will help you to achieve these goals. It is important to develop a comprehensive business plan that documents your goals.
The screening phase.
Now you can establish selection criteria for evaluating the target company. Criteria may include industry, location, sales volume, profitability, value of assets, as well as the seller's price for the business. It is helpful to compile a list of potential target companies using industry and trade data publications and directories. Screening the target companies in this manner will help to eliminate all but the most likely targets and to identify those candidates worthy of further investigation.
The investigation phase.
Once the target companies for acquisition are identified, it is critical that they be thoroughly investigated. This research should include an analysis of each company, including its financial and operating history and future outlook. If you determine that the acquisition is worthwhile and will assist you in achieving your goals, you may decide to
pursue the transaction by making an offer.
It is important to consider the tax aspects of the transaction when formulating the offer. A properly structured transaction can result in substantial tax savings to both the buyer and the seller.
The negotiation phase.
The buyer and the seller will have specific needs that must be met. These needs often conflict and must be negotiated. Counteroffers are made, evaluated, and modified, until a final agreement is reached. At this point, the necessary documentation is prepared and the transaction is completed.
CPAs have the experience and ability necessary to guide you through each phase of the acquisition process. Their knowledge of this process, combined with their skills in planning, valuing, investigating, negotiating and tax planning are crucial to a successful acquisition.
The expertise of a CPA will help you to avoid the many pitfalls and problems that could arise in buying a business and enable you to ultimately achieve your goals.
Before settling on a price for a business, consult a CPA to help you determine the company's worth and examine the tax aspects of the transaction.
WHY CHOOSE A CPA?
Purchasing a business is a major undertaking. The process can be
lengthy, complex, exhausting, and occasionally frustrating. Enlisting
the help of astute professionals to advise you can lead to success in
acquiring the right company. Besides attorneys, bankers and insurance
agents, a CPA should be a key member of your acquisition consulting
If you are considering buying a business, you should contact your
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