Buying a business can seem like a golden opportunity, but without the right checks, you could be wasting a lot of money.

At Carthy Accountants, we help ensure the business you’re buying is what it claims to be, so you don’t end up with a financial burden instead of a profitable venture.

Why Are They Selling?

Understanding why the current owner is selling is crucial. Are they retiring, or are there deeper issues? Are there financial troubles, market challenges, or internal problems? Knowing the reasons behind the sale can prevent you from making a costly mistake. You’ll need to ask the right questions to uncover the full story:

• Is the business facing financial difficulties?
• Are there legal or regulatory issues?
• Is the market shrinking or changing?

We help you dig deeper into these questions, ensuring you’re not stepping into a problem that the current owner is trying to escape.

Are the Finances in Good Shape?

One of the most important steps when buying a business is assessing its financial health. You’ll need to review the company’s accounts, including statutory filings and internal reports. This will help you identify any red flags, such as poor cash flow, hidden debts, or unsustainable expenses.

Key areas to review:

• Profitability: Is the business generating consistent profits, or is it struggling to stay afloat?
• Debt: Are there outstanding loans or liabilities that could impact future profitability?
• Cash Flow: Is the business able to meet its day-to-day financial obligations?

We can ensure you get a clear picture of the company’s financial health. You’ll get expert advice to help you make informed decisions, so you can avoid buying into financial trouble.

Is the Team on Board?

When you buy a business, you’re not just acquiring assets, you’re inheriting its employees. You’ll need to evaluate whether the team is capable and motivated to continue under new ownership. Losing key staff after a sale can be costly, both in terms of recruitment and operational stability.

Questions to consider:

• Will key employees stay? Meet with management and top staff to gauge their engagement and future plans.
• Is the team experienced and motivated? A strong team is critical to the success of the business under your ownership.
• What will it cost to replace any staff that leave?

We can help you assess the team’s stability, so you’re not left with a business that’s understaffed or lacking in leadership.

Have You Done Your Due Diligence?

Due diligence is critical to avoiding costly surprises after the purchase. You’ll need to examine the company’s legal standing, tax filings, contracts, and any potential liabilities. Failing to do so can leave you exposed to hidden problems that could sink the business.

Key due diligence steps include:

• Reviewing contracts: Are there any long-term agreements or liabilities that could affect profitability?
• Checking tax records: Are there any unpaid taxes or unresolved tax issues?
• Investigating legal matters: Are there any pending lawsuits or regulatory challenges?

We help you complete thorough due diligence to ensure there are no hidden skeletons in the cupboard. We’ll flag any risks, so you can avoid buying a business with unresolved legal or financial issues.

Can You Negotiate a Fair Price?

Don’t pay over the odds for a business that isn’t worth it. You’ll need to research the market value of the company and negotiate effectively to secure the best deal. If the numbers don’t add up, it’s important to know when to walk away.

Tips for securing the best price:

• Research the market: Understand what similar businesses are selling for.
• Negotiate: Don’t accept the first offer. Use professional advice to negotiate the terms.
• Know your limits: Be prepared to walk away if the price or conditions don’t meet your expectations.

How Carthy Accountants Can Help

At Carthy Accountants, you’ll get expert guidance through every step of the buying process. We help you avoid costly mistakes, assess the true value of the business, and ensure you get the business you want. From reviewing the finances to conducting due diligence, we’ll give you the confidence to make the right decision.

Ready to buy a business? Contact Carthy Accountants today to ensure your acquisition is a smart, informed investment.

Don't buy a lemon; make sure you get the business you want!