Getting The Best Terms When Buying A Business

805 words - 3 pages

You have dreamed of owning a business. Now that you have found the right one for you, negotiate to buy the business. Do not be saddled with terms that can ruin your opportunity before it even gets started. Negotiations will evolve so you must have an open mind and a “can-do” attitude to produce a deal. Think about the points to be negotiated, what your position is and what your rebuttal will be for the seller’s comments. Here’s how to make sure you get the best deal when buying a business.

Prepare for the negotiation.
Study market dynamics, the competition, supplies market, and industry statistics of comparable businesses sold to come up with the proper valuation. Shop around for the best account deals – interest rates, loan terms, penalties, etc.

Assess your finances and structure payment accordingly.
Know your upper limit spending. Offer a minimum figure you reached through your own valuation. Provide supporting reasons and proof how you derived this figure. Ask “what if...” questions to lower the confidence of the seller regarding his or her asking price. Use market fluctuations and economic factors to your advantage. If a third party will finance the sale, make sure the sales deal is contingent on obtaining that financing.

Get as close as you can to the seller’s down payment figure but negotiate for some concessions in return. Ask for reduced interest on the balance of the purchase amount, a grace period of 3 to 6 months on the first payment, no interest for the 1st year, no penalties on early payments, and the like. When you give something to satisfy the seller, you should get something you need in return.

Consider an earn out.
Earn outs are resorted to if there are valuation gaps to bridge. For example, if the seller of a business for sale wants a higher price for the company, the buyer can suggest an earn out (contingent on future earnings) while committing to the higher price. Risk is reduced because part of the purchase price is contingent upon good performance of the business. The buyer usually pays 50 to 70% of the purchase price up front with the remaining 30 to 50% structured as an earn out and paid over a period as the acquired company achieves certain performance criteria, e.g., profit or a certain sales level, retention of specific clients or vendors, or other contingencies over a specific period following the closing of the sale.

Have a positive relationship with the...

Find Another Essay On Getting the Best Terms When Buying a Business

Describe the different roles in a business buying center. Then outline which individuals might play those roles in the process of buying food for a school cafeteria

1666 words - 7 pages A.Describe the different roles in a business buying center. Then outline which individuals might play those roles in the process of buying food for a school cafeteria.Buying centers have numerous of roles of participation in the purchasing decision process. There are users who are the people who actually use the goods and services. Their role in the consumer decision making are very important. The user may help to facilitate the purchase actions

Holden purchase. A description of my buying decission process when purchasing a holden astra

811 words - 3 pages desperately dependent upon, was gone forever.How involved were I in the decision process, and how did marketers influence me in the different stages of the decision process, when buying the car?Buying a car is not a small deal. It constitutes a significant departure of a persons money, at least this is the reality for most people. This again will make us more involved, as it is not a routine purchase and there is significant difference between

The Terms of a Contract

5587 words - 22 pages was agreed by telephone for the hire of a crane. A written document was sent afterwards the terms of which were similar to those used by all firms in the plant-hiring business including the hirer themselves. One clause stated that the hirer was liable to indemnify the owner against all expenses in connection with the use of the crane. The crane sank in marshy ground with neither party to blame. The hirers claimed that the

The impact on a business firm when a host country joins the WTO

1819 words - 7 pages have been acting against them. But once the taxes go away and it all comes down to 5% flat duty that would be in a position to compete with them.The Asian tigers and other Asian productive economies like India have also been working hard and in all likelihood they too will be faring well when the time comes and that is a very positive sign altogether. So from a business firm's point of view it all comes down to how well can they manage and run

A Business Analysis of Best Buy

1470 words - 6 pages be over 17 years of age to buy a game like this. Best Buy in addition, made a rule that, they don’t carry any games that is adult only (AC) game in the store or online to sell. If someone is buying an M (mature) game a cashier has to check any customers’ age that looks under the age of twenty – one. When they hire anyone they are to read and sign an agreement that they understand the policy and if they fail to follow that they can be

What is a buying center. Explain how the prcoess of buying center

1140 words - 5 pages day-to-day operations) to almost five (for such high tickets purchases as construction and machinery). To target their efforts properly, business marketers have to figure out: who are the major decision participants? What decisions do they influence? What is the level of their influence? What criteria do they used?When a buying center includes many participants, the business marketer will not have time or resources to each out to all of them

The Importance of a College Education when Starting a Small Business

1357 words - 5 pages The Importance of a College Education when Starting a Small Business.The reasons for the interest and desire to start a small business may be varied. A desire to work independently, to be the boss and create a good income for oneself, not for another person, can be a great motivator. Starting a business may not be difficult, but staying in business and making it successful through proper planning requires a lot of business knowledge. A college

When Rationalism and Empiricism Collide: the Best of Both Worlds

1346 words - 5 pages repeats itself when similar conditions are present, and other areas of thought are no exception to the matter. Overall, empiricism and rationalism are best used together. While effective on their own, together they allow for a new level of understanding because of how well they complement each other in application. One without the other results in a half truth and, ultimately, leaves a question warranting further investigation. Because of its

Business Impact to a IT firm when China enters the World Trade Organization

2112 words - 8 pages . At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business."(World Trade Organization, 2003)International Marketing Analysis has been suggestive of the fact that things will change. The markets will grow and they will open up when a country joins the WTO, and once they

?Revolutions Occur When Governments are Weak.? Discuss in Terms of the Russian Revolution and One Other

1852 words - 7 pages definition there is little to support the view that revolutions occur when governments are weak. There can be little doubt that revolutions are more likely to succeed when governments are weak, however revolutions occur for a range of far more complex reasons rather than simply the opportunity arising. For example the present government Ireland would have very limited ability to resist a well organised revolution, however it does not occur because few if

Are the Nation’s Sons Getting a Fair Shot?

2470 words - 10 pages terms. TERMS Achievement: something that somebody has succeeded in doing, usually with effort. Biased: an unfair preference for or dislike of something; distortion of results: the distortion of a set of statistical results by a variable not considered in the calculation, or the variable itself. Boy: a young male person Classroom: a room, especially in a school or college, where classes are held. Curricula

Similar Essays

The Selection Process When Getting Hired

592 words - 3 pages Before the selection process took place, the criteria’s that applied to pick an employee to the organization must be discussed. A). FORMAL EDUCATION: Formal education presumes the use of scholastics’ certificates and training courses that applicants had before, as academic evidences for getting admitted to the job. It’s said; it refers to the classroom training an individual has received in public or private schools and college, university

13 Tips To Consider When Buying A Laptop

821 words - 4 pages Laptops are an excellent solution for anybody who needs to have all of their information portable. However, purchasing a laptop is different from buying a desktop computer given that the latter are generally not portable. Below is a list of 13 tips to use when purchasing a laptop computer. Purchasing a home or business laptop can be confusing and, at times, frightening, given the fact that the majority of users today have experience with

What Not To Do When Buying A New House

816 words - 4 pages specific features you want in a property and prioritise looking for them in the choices your agent may present to you. This way, you know which aspects to look at, and which features you and your family can actually do without. When you finally settle your eye on a property, learn to negotiate (http://www.home.co.uk/guides/buying/negotiating.htm). Chances are that the price listed on the market may be a little higher than what the owners are willing

6 Questions To Ask When Buying A Scanner

695 words - 3 pages you need to scan in colour? Another thing that buyers should consider when shopping for a scanner is whether a colour or monochrome scanner would be ideal for their workplace. This choice would, of course, depend on one’s scanning needs. For those who scan purely text or black and white technical documents, then monochrome scanning might be the best way to go. But if you need to scan coloured documents frequently or prefer to retain its colour