One of the most important things you can do when buying a business is to admit that you don’t know everything and get highly skilled and qualified advisors to assist you whether you are selling or buying a business
List Of Advisors That May Be Able To Assist You
Below is a list of potential advisors and services commonly offered by professionals that can help you sell or purchase a business.
Provides tax planning, financial advice, and business consultation. They can scrutinise the financial records of a business before you buy and should be skilled at being able to see what is wrong with a business. You should consult your Accountant before putting your business on the market, they can help your put strategies in place to get the best price.
Is responsible for keeping records and documents of a business. They can prepare monthly Profit and Loss reports and keep you up to date on the numbers of the business. An invaluable resource once you have purchased your business.
Is a legal professional that handles all legal documentation involved in buying or selling a business. They can draw up the sale contract for the seller. They will tell a buyer or seller their legal obligations and rights under a sale agreement and provide advise to the buyer on pitfalls in the sale agreement.
Is a professional or firm that acts as an intermediary between sellers and buyers of businesses and their intermediaries. They can act for either the buyer or the seller.
They understand the requirements of all professionals involved and will help broker a deal. Many business brokers offer additional services in relation to finding a business, marketing, negotiations, valuations, appraisals and writing information briefs.
If you are a seller and you think you are going to struggle with the negotiation, you may be advised to hire a Broker who can handle this side of the sale for you.
Is a person qualified (by a reason of education, qualification and experience) to provide a professional and unbiased opinion of the value of the business using established valuation methodology.
Financial Advisor (Including Banks)
Is a professional or firm who renders investment advice and financial planning services to individuals and businesses. Ideally, the financial advisor helps the client maintain the desired balance of investment income, capital gains, and acceptable level of risk by using proper asset allocation.
Financial advisers use stocks, bonds, mutual funds, options, futures, notes and insurance products to meet the needs of their clients.
A person with experience and skills in assisting business owners to create plans and strategies to grow a business. When you are running a business you can sometimes not see the forest for the trees. A business consultant can give an outsiders perspective of the business that the business owner may not see.
They can assist sellers to prepare their business to get the best sale price and they can assist buyers put together a business plan and direction for the new business.
How To Find An Advisor
There are a wide variety of places to seek professional advice. You could start with your bank. Typically, advisers at banks operate in a highly regulated environment. They tend to be cautious in the advice they offer, given the importance of reputation in this sector.
However, banks cannot always offer the range of products and scope of services that other professionals can. The advantage that other professionals have is that they are not tied to a specific set of products, so they can easily match your needs to a range of solutions.
Make a list of questions to ask before calling any advisors. These questions can include:
- What are your qualifications in your area of expertise?
- What experience do you have in my type of business?
- What are your fees?
- Do you have references and online reviews?
These are questions that can help qualify if a potential advisor is a good fit.
Once an advisor is found a consultation meeting should be arranged. These advisors will preferably be qualified, have fees that you can afford, and must be able to provide you with references. Make sure that both you and the potential advisor set aside plenty of time for an interview (1-2 hours).
During the consultation meeting with the advisor, ask:
- Are you capable of achieving a particular outcome?
- How do financial information and records get transferred between us (hard copy or electronically)?
- What software will I need if any?
- How will you help me?
- What other services can you provide?
- Why should I choose you as my business advisor?
There will be other questions and discussion that are specific to the particular advisor. A written list of questions should be prepared to take to the meeting. At request, a good potential advisor will be able to send out some information before the meeting.
A decision should not be reached until all potential business advisors that meet your expectations are interviewed. Some advisors have better deals or have better networking connections than others.
Business advisors are important. They will have access to confidential information and will be a valuable resource for solving or avoiding business problems down the road. If after completing this process you still are interested in more than one potential advisor, request a second interview, and ask more in-depth questions.
Avoid the flashy types unless you get really great genuine references. There is a saying “Hire a work horse not a show pony”.
Remember, referrals from friends and associates that you respect and who are successful can be the best source of great professional advice.
Challenges For Business Buyers (& Sellers)
One challenge when managing a business sale/purchase process is to know whose advice to take. There are a large number of advisers that deal with business transactions and unfortunately not all of them are professional and responsible with the advice they provide.
In addition, business sales is an area where everybody has an opinion. Trying to follow the suggestions of friends, family or colleagues can be a problem, (while they will have your best interests at heart) they are not professionals, and unfortunately can be drawn as easily into myths and fashions as anyone else.
Business advice is still under-regulated. There are no minimum standards of service, or agreed expectations for professional conduct, or even an agreed minimum standard of qualification for entry into the business sales sector.
Given these concerns, a business owner or buyer is best advised to seek an adviser they can trust, understand and works for a common objective.
Ideally, advisors should have recognised qualifications, and work in independent institutions not tied to a particular provider.