1Why buy a business instead of starting one?
It may take more money than time to buy a business. It takes more time than money to start one. The break-even point for buying versus starting a business is the cost to buy equipment, rent a space, pay a staff, pay for advertising, establish contractual relationships and support yourself while you are building up a customer base.
If you buy an established business, you have an income from the day you take over. You already know what can be accomplished by the business. If you start a business, you face a lot of uncertainty over the success and desirability of your product or service. Buying an existing business takes a lot of the risk out of your decision.
2What is the best type of business to own?
Beauty is in the eye of the beholder. Most Buyers want to own a profitable, well-managed business in an industry that holds a personal interest for them. On the other hand, some Buyers may look for opportunities that offer turnaround potential, where they can apply their special skills. In general, there is no industry that is particularly better than another.
That is why CII developed it's proprietary "Buyer Profile." When the profile is complete, it will help your CII Intermediary recommend the right business for you.
3What is done during the due diligence period?
The due diligence period is used by you to review all aspects of the business - not only the financial aspects of the target business, but competition, changes in market dynamics, available financing, and all other issues that should be considered in purchasing a business. Your accountant and attorney should review the financial and legal aspects of the purchase.
Upon the completion of the due diligence period, you and the Seller are ready for the completion of the sale. To facilitate the closing, a transaction attorney is often used. The attorney is responsible for filing the required paperwork, and ensuring that all licenses and leases are properly handled for all parties to the transaction.
Your CII Intermediary is available to assist with identifying lenders, the transfer of licenses, the assignment of lease and franchise rights, and the performance of due diligence for the target business. If required CII offers business plan services to include financial projections that will generally be required by outside lenders.