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7 Essential Questions to Ask Before Buying a Business
Buying a business is a significant investment that requires careful consideration. To make an informed decision and reduce risks, you need to ask the right questions. Below are seven essential questions every buyer should ask before finalizing any deal. These will help you understand the business’s true value along with potential risks.
1. What Are the Biggest Challenges the Business Is Facing?
Understanding the current challenges the business is facing is vital. Whether it’s cash flow problems or potential competition out there in the market, knowing these challenges allows you to assess the level of effort that will be required. It can also give you insight into potential opportunities for improvement and growth after the acquisition.
2. How Did You Arrive at the Asking Price?
It’s a good idea to understand how the seller determined their asking price. Was it based on straightforward financial metrics like revenue and assets? Or was there some other rationale? You need to figure out if the asking price is fair, and you’ll certainly want to know if there’s room for negotiation.
3. Are There Any Legal Issues or Pending Lawsuits?
Lawsuits or legal disputes can have a significant impact on the business’s value and your future responsibilities. Ask if there are any ongoing or potential legal issues, such as lawsuits, intellectual property concerns, or other legal challenges. This will help you avoid future complications and unexpected costs that could arise post-sale.
4. How Well Are the Business’s Financials Documented?
A business’s financial health is the cornerstone of any successful transaction. Ask how the seller documents the business’s financials. Are the records clear and organized? Request to see tax returns, profit and loss statements, and balance sheets for at least the last three years. Well-documented financials ensure transparency and will help you make an informed decision.
5. What Skills or Expertise Are Required to Run the Business?
Every business requires a unique skill set to operate effectively. Before moving forward, consider whether you have the skills, experience, and knowledge to run the business. If not, are you prepared to hire or train someone who can fill that gap? Understanding the skill requirements will help you assess whether the business is a good fit for you.
6. How Dependent Is the Business on Key Customers or Vendors?
A business that relies heavily on a small number of customers or vendors can be risky. Losing one or more key clients or suppliers could significantly impact the bottom line. Ask about the business’s customer base. If a few clients account for a large percentage of revenue, it’s essential to evaluate the risk of losing those relationships.
7. What Will Happen to the Employees After the Sale?
Employees are often a key asset in a business. Before buying, ask what will happen to the employees after the sale. Will they stay on? If so, will their roles, salaries, and benefits remain the same? Understanding the status of the staff is critical for a smooth transition.
Asking these seven essential questions will help you uncover critical details about the business you’re considering purchasing. The more information you gather, the better prepared you’ll be to make an informed decision, minimize risks, and ensure that your new acquisition is a sound investment. This process will help you avoid headaches down the road.
Copyright: Business Brokerage Press, Inc.
The post 7 Essential Questions to Ask Before Buying a Business appeared first on Deal Studio.
The Power of Employee Engagement: Why It Matters for Your Business
Your employees are more than just part of your team. Employees are the driving force behind your business’s success. If you want your company to thrive, the happiness and satisfaction of your employees should be a top priority. An unhappy workforce can lead to negative energy that makes its way into customer interactions. Ultimately, your bottom line may begin to suffer. Investing time and effort into creating a positive workplace environment will pay off in many ways.
Hiring the Right Fit
The foundation of employee satisfaction starts with your hiring process. When bringing on a new team member, you’re starting a relationship that will impact your company in many ways.
It’s important to write job descriptions that accurately reflect the role and make the position attractive to the right candidates. It’s also crucial that anyone involved in hiring is trained to follow best practices. This will ensure a smooth and professional recruitment process. They will be the first person your new employees will encounter, and that means that they set the tone from day one.
How to Keep Employees Engaged and Happy
Once you’ve built your team, it’s essential to actively think about their satisfaction. Never just assume that employees will naturally stay motivated or invested in their work. It’s your responsibility to ensure they feel valued, appreciated, and driven to contribute.
Here are some actionable steps you can take:
- Provide competitive salaries and benefits
- Recognize their achievements
- Offer rewards like bonuses or public recognition
- Give employees time off for birthdays and vacations
- Seek employee feedback
- Offer opportunities for career growth
- Encourage relationships among your staff members
When employees are happy and engaged, their positivity will positively impact customers. Satisfied employees not only tend to stay with the company longer, but they also become more motivated. This will lead to increased productivity and a stronger bottom line.
Copyright: Business Brokerage Press, Inc.
The post The Power of Employee Engagement: Why It Matters for Your Business appeared first on Deal Studio.
SBA Changes Effective June 1, 2025 – What You Need to Know
1. Equity Injection + Seller Note Standby Rules
• SBA still requires a 10% minimum equity injection for business acquisitions, startups, and ownership changes.
• Buyers must inject at least 5% of the project cost from their own funds.
• A seller note can only cover up to 50% of the required equity (i.e., 5%).
• Seller notes used for equity must now be on full standby for the full 10-year SBA loan term—no payments of principal or interest allowed during that time.
2. “Credit Elsewhere” Rule Reinstated
• The SBA has reinstated the Credit Elsewhere requirement. This means that borrowers who have access to sufficient capital—whether through personal funds, investments, or conventional loans may no longer qualify for SBA financing.
• This update will primarily impact high net worth individuals who could self-fund a transaction.
3. Seller Retained Equity = Personal Guarantee
• If the seller retains any amount of ownership (1% or more), they must:
o Personally guarantee the SBA loan for 2 years
o If their retained equity is 20% or more, they become a full guarantor for the life of the loan
4. SBA Franchise Directory Returns
• The SBA Franchise Directory has been reinstated.
• SBA loans can only be used to finance franchises listed in the directory.
5. Citizenship & LPR Ownership Requirements
• Effective March 7, 2025, SBA financing is only available to businesses that are 100% owned by:
o U.S. Citizens
o U.S. Nationals
o Lawful Permanent Residents (LPRs)
• No ownership interest of any kind is allowed for non-citizens, including visa holders.
3 Meeting Tips for Buyers and Sellers in Business Transactions
When buying or selling a business, the initial meeting between the buyer and seller can be a critical turning point. This meeting often sets the stage for the future of the deal. After all, the buyer’s first offer typically arrives right after this pivotal discussion. Ensuring that the conversation is positive, professional, and productive is crucial for both parties involved. Business brokers and M&A advisors play an essential role in preparing both buyers and sellers to navigate these discussions successfully.
For buyers, it’s important to have a clear understanding of how the selling process works and what to expect during the meeting. Heeding the advice of their broker is key, as it helps maximize the chances of favorable outcomes.
On the seller’s side, transparency is vital. Sellers should aim to be open and honest without being too heavy-handed. A balanced approach that fosters trust is far more likely to yield results.
Ask Thoughtful Questions
For buyers preparing to meet with a business owner, it’s important to ask relevant questions. A buyer who asks well-researched and meaningful questions will demonstrate a genuine interest in the business. This not only builds credibility but also helps establish a foundation for mutual respect.
Buyers should come to the meeting prepared. They should be sure to do their homework in advance. This can mean everything from reviewing financials and gaining an understanding of the industry to identifying potential risk. These actions will help create a positive impression and lay the groundwork for a productive conversation.
Build a Rapport
Throughout the meeting, buyers should maintain a polite, respectful demeanor. It’s best to steer clear of controversial topics like politics or religion, as these can easily lead to unnecessary conflict. The goal is to foster a relationship based on trust and professionalism. If a seller doesn’t like or trust a buyer, it could create obstacles that prevent the deal from moving forward.
Sellers often view their business as a personal legacy, a culmination of years or even decades of hard work. This emotional attachment means that buyers should approach the meeting with a degree of sensitivity. They should understand that the business represents more than just a financial transaction. A failure to acknowledge the seller’s emotional investment could harm the relationship and that could lead to jeopardizing the deal.
Embrace Honesty
While sellers are seeking to sell their business, they should avoid presenting themselves as overly sales-focused. Buyers appreciate authenticity and transparency, so sellers should strive to present their business honestly. That means sharing both its strengths and its challenges.
It’s also essential for sellers to acknowledge the competitive landscape. Every business faces competition, and attempting to downplay or ignore this reality will likely raise red flags. A truthful approach is far more likely to foster trust and lead to a successful transaction.
The Role of Brokers and Advisors
Ultimately, business brokers and M&A advisors are invaluable throughout this process. They guide both buyers and sellers in preparing for the meeting and help set realistic expectations. By working closely with both parties in advance, brokers ensure that the discussion is as constructive as possible, improving the likelihood of a positive outcome. With proper preparation and expert guidance, both sides are more likely to walk away with a successful agreement.
Copyright: Business Brokerage Press, Inc.
The post 3 Meeting Tips for Buyers and Sellers in Business Transactions appeared first on Deal Studio.
5 Questions to Ask Before Purchasing a Global Business
Purchasing a business abroad involves unique challenges and factors. There are considerations to keep in mind that you typically won’t face when buying a local business. The decision to invest internationally is complex and influenced by various elements. Let’s take a look at some of the best practices for anyone looking to buy a business in another country.
What Can You Learn Through Research?
The first thing to do before making a decision is to thoroughly research similar businesses in the country you’re considering. While you may be well-versed in a specific industry or business model in your own country, the landscape may be entirely different elsewhere. Operating the same type of business in another nation could come with unexpected hurdles, so it’s best to get a lay of the land as soon as possible.
It’s essential to understand the local market and business environment to ensure your success. The approach that works in your home country might not apply in the same way abroad, so it’s critical to learn from other businesses operating in that region. This research could be the determining factor between thriving and struggling in your new venture.
Will You Relocate?
Another important choice is whether to move to the country and run the business yourself or hire a local manager to take the reins. Each option has its advantages and drawbacks. Relocating to oversee the business firsthand is a significant personal commitment and may change your lifestyle in a way that you’re not prepared for. However, this shift could either help or work against your business depending on your own circumstances.
Will You Hire Someone on the Ground?
If relocating doesn’t seem like the right move for you, hiring an experienced and trustworthy local manager might be a good alternative. Of course, entrusting the business to someone else comes with risks, so finding a reliable manager who understands the local market and has a proven track record is a good idea.
What are the Cultural Differences?
Cultural differences are another critical consideration when buying a business abroad. Ignoring or underestimating these differences can lead to costly mistakes and even jeopardize the success of the business. Cultural nuances will impact everything from customer relations to staff management, so it’s essential to gain a deep understanding of how these differences will affect your operations.
Additionally, language barriers can pose a significant challenge, so it’s important to be mindful of how not speaking the local language could affect your business.
Who Can Assist You?
Equally important is understanding the local regulatory environment. Legal and tax requirements can vary significantly between countries and regions. Not being well-versed in these regulations could result in serious consequences. It’s wise to partner with local experts who can help you avoid potential pitfalls related to taxes, and other legal issues that may arise.
Lastly, working with an experienced business broker or M&A advisor is one of the best ways to safeguard yourself when buying an international business. These professionals bring invaluable expertise to the table and can connect you with a network of global resources and specialists. Their knowledge and connections can be essential in helping you navigate the complexities of international business transactions.
Copyright: Business Brokerage Press, Inc.
The post 5 Questions to Ask Before Purchasing a Global Business appeared first on Deal Studio.
