Buying a Business

1. The Initial Approach

From the outset, your aim is to make the vendor want to sell the business to you.

1.1 Establish your credibility.

Your integrity and your future plans for the business are usually extremely important to the vendor (see Selling a business).

• Formally register your interest in buying the business. The target business will usually have instructed professional advisers to sell the business. Approach the advisers, rather than the management.
• Explain what your business is, why you are interested, and how you will finance the purchase.

1.2 Work out the vendor's objectives. For example:

• Does the vendor have to sell? If the answer is yes, what time pressure are they under?
• Does the vendor wish to sell assets or a company which holds assets?
• Is money the prime motivation for selling?
• Does the existing management aim to stay involved in the business?
• Expose areas of the business which need to be changed.