Company Purchase

[wilfredw]

We have identified a service business (hairdressing salon) that we would like to purchase and we will start negotiating with the current owners shortly. Does anyone have any tips on what we should be looking for? Also, if we need to raise money from the bank, how much of the purchase price (30,000) would the bank typically expect us to have? I am just looking for guidelines from people who may purchased a small business before.


Thanks

Wilfred

 

[Alpha]

As you are starting negotiations shortly I take it that you have been given previous years accounts.

You need to use these as a basis for a business plan which will outline what the ongoing situation is and what you will add to the business.

Identify what stocks will be included in the purchase price and how much is for goodwill.

At the price you mention I assume that the business rents its premises. How long is there to go on the lease?

Are there currently staff employed in the business, will they want to stay, if not is there a possibility of them taking their clients elsewhere.

Is there any other income from 'rent a chair' arrangements?

Get all your ideas on paper and take them along to see a few bank managers but if you have a current banking arrangement the manager will know your circumstances better.

There is probably little asset backing for the loan but usually you can get standard loans from places like alliance and leicester up to £25 k unsecured.

 

[wilfredw]

Thank you. Will start on it. There's 7 years left on the lease with the opportunity to break it in 2 yrs (original was 10 yrs).

 

[Jayne]

Don't forget to check out Business rates with the local council, you may get a nasty shock if you don't. Ours have gone up quite a bit and may not show up in previous accounts figures.

Also have a drive around the area and check out the compertition.

Most business loans ask for a deposit of 20 -25% depending on banks, if you wish to borrow more than £30,000. If you are under 30 yrs old you may qualify for a grant. Read other forum questions, loads of info.

Also, check all equipment is working and they have had there electric checked. Our first shop gave us elec' shocks on the plugs and the first time it rained, it flooded the bakery, so check everything you can think of.

Best Wishes

Jayne