When buying a small business in Florida, you must guarantee that the purchase agreement includes everything required to maintain the company operating actively. It is fundamental to negotiate every detail of the transaction and put the terms and conditions in writing.
In this article, you will discover how to buy a small business in Florida.
Buying a Small Business in Florida – The Fundamentals
What is the Seller’s Motivation?
After finding an interesting business offer, it is crucial to find out why the seller decided not to continue running the business. Depending on the seller’s motivation to sell, it may raise some red flags.
For example, selling a profitable company to retire or move to a different business segment are reasonable ways to justify the seller’s interest. However, sometimes the owner may want to get rid of the company, especially if:
- The business is not as profitable as it appears to be
- The effort required to operate the business is overwhelming
- The demand for the company’s goods or services has diminished over time, or
- The business is struggling to survive the competition
It is fundamental to ask the current owner of the business to provide financial records and other evidence that the business is actually going well. If you feel the owner is not being sufficiently transparent, it is possible to talk with employees and consult other sources of information.
What is the Demand for the Company’s Goods or Services?
Depending on the goods or services provided by a company, it may be subject to seasonality, steady profitability levels, or even a continuing decrease in demand. Before purchasing an existing company, a prospective buyer must investigate and identify:
- Whether the demographics of the customer base are changing
- The level of competition in the area
- The tendency for the company’s segment at short, medium, and long-term
- Whether other companies in the same area are thriving or declining
- Whether the relevance of the business may be affected by new technologies
- Whether changing trends may affect the demand for the company’s goods or services
- Whether the business profitability has been steady throughout the years
No matter how promising a business offer might be, prospective buyers need to be realistic and stick with feasible evidence. If there is a continuing demand for the business, it may be a good investment.
What Are the Obligations Acquired with the Business Purchase?
No business is perfect, which means purchasing an existing company may also expose the new owner to obligations from previous owners. If you are interested in buying a small business in Florida, make sure to identify the existence of:
- Contractual duties
- Unsettled lawsuits
- Unpaid loans
- Unpaid debts and taxes
- Pending licensing or permit-related obligations
- Zoning issues
These are only examples of elements that may jeopardize the new owner’s ability to focus on increasing the company’s profitability due to time-consuming and stressful liabilities resulting from a previous owner’s actions.
The best strategy is to work with a seasoned business acquisition attorney to identify all the obligations involved in the transaction and draft a solid purchase agreement to shield you against any unexpected liabilities.