How To Buy a Business
You want to be in business but most new businesses fail. Fact.
If you've realised that the best way of reducing the risk is to buy a
going concern with a history demonstrating profits, you're already ahead
of the game.
Buying does involve a larger capital investment, that's true, but there
are several ways to skin the financing cat. Not having adequate funds to
make the purchase is rarely a deal breaker (sellers often finance the
purchase by taking a "note" or deferred payment).
The tricky part is finding the right enterprise, doing the due
diligence, valuing the business, negotiating with the seller, navigating
around all the hurdles such an exercise usually presents and completing
the transaction in a safe and satisfactory manner.
To that end you can be guided by a business broker or your government's
local small business advisor. There is no substitute, however, for being
fully informed yourself as no business transfer agent, advisor or other
party will take ultimate responsibility for the safety of your investment.
There are several good books on the subject but, as regular readers of
this site will know, I'm a great believer in free information. We've got a
lot of material on
due
diligence,
valuations,
choosing an escrow company and even on
finding business brokers.
So
in that spirit of free, I've picked out the books I most recommend and...
provided links for you to read them gratis. For those of you who must
have a printed copy, click on the affiliate buy now link but, when you get
to Amazon don't forget to read the small print. See the image to the right
here? Yes, this $111.02 book is available for $0.01. You can't get much
closer to free than that.
Recommended Books
The top recommendation is Richard Parker's Guide:
How to Buy A Good Business At a Great Price
 Richard
has a huge wealth of experience at the coal-face buying businesses. He
writes in an easy to understand style and provides invaluable advice and
many unique insights into business buying. He writes for and advises
various organisations including one of the world's biggest
business-for-sale listing companies, Bizquest; actively buys businesses
himself; is a faculty at the Donald Trump university and a general
all-round great guy. He has consulted with me on some of his content ...
and that's good enough reason to trust him :-)
This book is available in print format, downloadable pdf and CD-ROM,
and the best part is that he provides a lot of free information in the
extracts and articles on his site. Every purchase also comes with
unlimited free consulting with the man himself!
 This is the
only business buying guide that has a companion product specialising in
the
buying of on-line businesses.
| Read extracts
and contents
 The
Upstart Guide to Buying, Valuing and Selling Your Business (Scott
Gabehart, Dearborn Financial Publishing): An excellent book on the "how
to" of valuation, due diligence, financing and the whole ins and outs of
business buying. Amusing and informative. Not too much of information and
not too little, very user-friendly. Definitely the place to start (and
finish... unless you're looking at very large, multi-million dollar
businesses). Includes a detailed glossary and various reference material.
You can
buy the book at Amazon for about $110 but what we like best is that
you can
read it for free at Google books before you decide whether it's worth
the money. We think it is.
Read
it for free |
 The Complete Guide to Buying a Business (with CD ROM) (Fred Steingold
Attorney, NOLO), is a pretty good read for beginners and comes complete
with a CDROM, forms, spreadsheets to analyse the financials, sample
documentation like sales and security agreements, confidentiality letters
(NDAs)
etc. But it's a bit weak on business valuation and financing and often
refers you to other works by the same publisher. F.S. Attorney is the
author of several other books on running small businesses.
|
Read preview for free
 Complete
Idiot's Guide to Buying and Selling a Business (Ed Paulson, Alpha
Books): As with other Idiot's Guides, it starts by acknowledging that
you're no idiot and then goes on to explain in excruciating detail
everything from timing the buy to choosing a business to reading financial
statements, raising capital and minimising taxes. It tries to be all
things to both buyer and seller so provides a useful perspective
from "the other side" and also spends a fair bit of space on the actual
running of businesses. A good buy for the first time business buyer.
Read preview for free |
 Strategies
for Successfully Buying or Selling a Business (Russell L. Brown, Business
Book Press) is one of several business buying and selling related books
and tools available from this publisher. What's interesting is that their site provides
several articles and
extracts from the books that are really worth reading such as their 12 Laws
of the Business Buying and Selling Jungle,
Financing the Business Acquisition, So You Think You Want To Buy A
Business, Finding the Right Business to Buy and others. You don't need to
make a purchase to benefit from a lot of good information.
 Valuing
a Business (Shannon P Pratt, Robert F Reilly and Robert P Schweihs;
McGraw Hill): A heavy hardback of over 1,000 pages that's the definitive
book on the valuation of businesses - a reference book that has become a
bible for valuers. It's not for the faint hearted - nor, at $70, for
cheapskates - but over the last quarter century has passed the test of
time and is now in its 4th edition. It's used by lawyers, by private
equity firms, by M&A experts and is even the recommended text for most
advanced accounting classes. There is nothing about valuing businesses
that this book doesn't cover in great and thorough detail. Various
theories, principles and approaches on a myriad of tangible and intangible
assets and securities are examined in valuation situations ranging from
tax disputes to probate. At time of writing the cheapest used copy at
Amazon is selling for $8.50.
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Read preview for free
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