Purchasing an existing business is a great way to enter the world of entrepreneurship. There are many benefits in purchasing an existing business, including the fact that it already has a legal structure, employees, a customer base and is (hopefully!) making a profit. Growing from start-up to established business and getting all of these things in place can be a challenge which deters an individual from taking that first step. Buying an existing business removes that hurdle.
Not only can the purchase of an existing business appeal to the first time entrepreneur, it can also benefit those already in business that are looking to build on what they’ve already created.
It is essential to do your research to ensure you are making a good investment. The way you approach the business-buying process is important and you will need to ensure your investment is right for you and meets your needs. You will need to research the industry you are entering into, especially if it is an area you are unfamiliar with. Ensure you are aware of technological advancements and industry news. It is crucial to investigate and consider any legislative restrictions or requirements in the business or industry. Examine the revenue model, accounts and marketing plans. Talk to past clients and suppliers to make sure that the accounts add up.
You will firstly need to perform extensive research on the company. A formal business valuation is a good place to start and it is good practice to get more than one. Make sure you do additional, less formal research into the reputation and customer base of the business. This can be achieved through Internet searches and conversations with suppliers and those in the trade.
Once you are confident that you are ready to proceed, it is time to undertake due diligence and engage in the legal complexities of the purchase, together with any legal undertaking the business may require. It is also essential to ascertain any obligations or liabilities the business may carry and your commitment to them. Ensure that there are no outstanding pending legal claims, liens or judgments against the business as this may impact on your future trading. In order to ease this process and be secure in the knowledge these areas have been addressed, it is advisable at this stage to instruct a commercial solicitor to act on your behalf. This will be money well spent, as the right legal representation will evaluate the legal liabilities and advise on the investment you are about to make.
One company that we have helped with just such an acquisition is Optima Defence and Security Group.
Optima Defence and Security Group
Optima Defence and Security Group enhances human security, mitigating explosive threats in conflict-affected locations globally. They use their expertise and experience to help those trying to protect their communities and organisations from the growing range of explosive threats.
We had already partnered with Optima Defence and Security Group to facilitate a short term funding stream to expand and develop the business, when Stephen Bishop, the Finance Director, contacted Jamie from our Business Growth Team regarding a potential business opportunity: acquiring an organisation established in 1990 with its origins within the Military Clearance Diving as well as bomb and mine disposal disciplines. They had developed an all-embracing, rapid response diving and munitions location and disposal service. On land and underwater the organisation served governments, industry and civil authorities worldwide.
Realising that environmental management is widely recognised as possibly the most important new challenge facing industry and commerce, clearing the land and seas of the unexploded relics of war fit so well within what Optima Defence and Security Group were already doing. The organisation had located and rendered safe over 900 unexploded bombs on UK sites. This made the acquisition a very exciting proposition for the Optima Defence and Security Group. The organisation was profitable and had a strong potential order book of repeat business because of its reputation. All that was required was the funding for the purchase.
Jamie worked closely with Stephen, providing guidance to ensure the process and procedural format went smoothly throughout each stage of the process through to completion. Jamie also determined the appropriate type of facility for this purpose: our Pay Down Facility.
Working with Just Cashflow
When asked about his experience of working with us, Stephen told us that our team was easy to work with – proactive, ensuring the process moved seamlessly and swiftly. Stephen added that where there were complications with his bank, we were able to make helpful suggestions to assist the process.
When asked if he would use us again, Stephen said yes, without a doubt!
Are you looking to expand your business or acquire another company? Find out how we can help you fund your business growth with our flexible funding solutions.