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Buying a Business
2. Preliminary Due Diligence
You must be sure that the business has no major problems. Preliminary 'due diligence' is completed before you make a firm offer for the business. The vendor's Sales Memorandum usually glosses over the weak areas.
2.1 Get a feel for the business.
- Research its market and its main competitors.
- Meet the vendor. Try to visit the business.
- Assess the key risks associated with the business' future trading.
2.2 Ask industry experts for their views.
- What is the prospective demand for the business' products or services?
- Are prices and margins rising or falling?
- How is the competition in that market changing? For example, which new competitors are entering it?
Labels: Buying/Selling a Business
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