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Purchase of a Business

As everyone knows, the profits of a business carry most owners on a financial and emotional roller coaster. When purchasing a business, a thorough review of the financial history must obviously be made. However, a more important process that should be conducted is in ascertaining the true earnings capacity of the subject business. A valuation analyst will be able to identify items, particular to that company, which affects its ability to make money. A business valuator can help against a misguided, emotionally based purchase decision that could bring more headaches than profits. The "Golden Rule" for purchasing a business is "no deal is better than a bad deal".

It is better to obtain the financial statements and tax returns for a minimum of five years and more if possible. Many times financial statements may be adjusted in anticipation of selling the business. The more years of financial statements and tax returns available will help determine if adjustments need to be made in the analysis.

© Copyright 2002 by Delbert W. Exeter. All rights reserved.
This web page was last updated on March 01, 2002.