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FAQs - NGBB | How to Buy a Business

Buy a Business – FAQs

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What is a fair price?

The average business for sale in Perth will sell for anywhere between 1 to 4 times its annual discretionary earnings but many other factors come in to play – among them, the simple fact that in a free market a business is worth what a buyer will pay and a vendor will accept. Generally, price is determined by profitability, customer base, industry trends, and growth opportunities.

Why not start a business?

Purchasing an established business with a proven track record is much less risky than starting one from scratch. More than 80% of new businesses fail within the first three years. While you can do everything right to get the business up and running, the one thing you can never be sure of is whether or not it can be commercially successful. An existing business has cash flow, established customer and vendor relationships, trained employees and market proven products and services.

What are the key things to consider when buying a business?

The main thing to think about is “Do you like the business?” Further considerations are location, down-payment and the vendor’s discretionary income. What training will they provide? Will you be able to add value to the business?

How can NGBB help me buy a business in Perth?

NGBB is able to help you buy a business by connecting you with the right business to suit your financial and lifestyle requirements. We will also guide you through the purchasing process by facilitating negotiations, helping you manage the due diligence and all legal and financial aspects of closing the deal.

What is due diligence?

Preliminary due diligence is simply familiarising yourself with the business sector and the company’s place within its specific industry. Detailed due diligence is undertaken further down the track when you make a firm offer and is generally performed by an accountant, who preferably knows the industry. A sample list of what is reviewed during due diligence is listed below:

  • General information
  • Organisational matters
  • Litigation
  • Regulations and permits
  • Intellectual property
  • Financial and Accounting Matters
  • Receivables
  • Liabilities
  • Budgets and forecasts
  • Taxes
  • Material agreements and documentation
  • Sales and marketing
  • Insurance
  • Employee, deferred compensation & benefits
  • Environmental matters
  • Licenses
  • Relations with authorities
  • Miscellaneous

Can you help me with financing?

Yes. NGBB is able to direct you to experienced business finance brokers who can devise finance plan to suit your individual requirements when buying a business in Perth. These industry experts will help you to find the right loan to suit your personal and financial objectives. They will also help you wade through the fine print and see where the benefits in the terms of some loans can outweigh a low interest rate in others.