Buying a business in New Mexico?
The Dakin Business Group is your local Professional Business Brokerage. We provide business owners and buyers with tools and services including confidential business brokering and more. Members of the business group are professionals in their fields, each with a depth of expertise that gives the business owner the edge necessary to be successful.
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Expert Buying Tips
» Know what is critical to your process of buying a business before you begin looking.
It is easy to be enchanted with a business for sale in Santa Fe so knowing your criteria for making a selection is critical. Here are a few examples I used for a recent business purchase:
- Is the business financially viable, now and looking forward?
- Can I see the next generation of the business, knowing where I might take it?
- Is it a business I can be proud of and want to work?
- Will I enjoy and have the skills necessary to ensure the success of the business?
- Will the business support the work-life balance I want?
» Do due diligence after you sign a buy-sell agreement.
Due diligence is the process of evaluating whether the business for sale in Santa FE or Northern New Mexico is what it is presented as. Do the clients exist and how faithful have they been in paying. Is the net income, owner take, what is presented. Are the expenses claimed reality and can you maintain them? What has the track record for performance been over a number of years, at least the most recent two years? Due diligence usually covers:
- Financial health
- Historical performance
- Quality of the output
- Legal challenges
- Environmental, internal and external, challenges
- Forecasting performance based on what is found
Turn around specialists are those who buy a bad business but know in advance what they are buying, cut the right deal, and know they have the resources to bring quickly enough to reverse the downturn. Not everyone can be.
» Know yourself and your interest and capabilities to be first an entrepreneur and specifically with this business.
Not everyone is cut out to run his or her own business. While the risk may be equally difficult in other income earning environments, often people who are successful as employees doing the same kind of work may not be successful or happy as a business owner, particularly if they have put up their life’s savings as part of the purchase. If you hate widgets and buy a company that makes widgets, you are likely to not like owning a business that makes widgets. Perhaps knowing to walk away will help you ensure your success.
» Don’t do a deal without professionals around you.
Business brokers, attorneys, financial advisors all have a critical role in protecting you from a mistake. Expert valuation, legal documents, financial recommendations for the structure of the sale and general advice are all important to having a transaction that benefits you. To assume you know may cost you in a deal gone bad, limit your financial potential, land you in court. Professionals protect your interest.
» Choose carefully your financier.
It is very common for a number financial sources to be put together to facilitate the transaction. For your own contribution, don’t deplete your resources beyond reasonable. Leave yourself with a nest egg and a sum of money you might tap for the unforeseen. The current owner is usually a wise selection for financing. Having their vested interest in the future performance ensures they properly turn the business over to you and meet commitments to help. They are often a less expensive financing means. Professional lenders such as banks and venture capitalists are additional sources for financing with venture capitalists wanting more interest, faster return, and more input to the company operation. While they may seem too controlling, wisely selected, they can bring a big asset to achieving success.
» Buying assets, not liabilities, at least those you can not support, is a best position.
Most recommend asset only purchases. Sometimes this is not possible. Therefore using your advisors will help to keep you from assuming the liabilities that are not appropriate for you to assume, e.g. unpaid taxes.
» Only buy a business from someone who is willing to sign a non-compete.
Without their non-compete, the selling business owner can totally eradicate your newly purchased livelihood. Have your legal advisor ensure this is a part of the agreements you sign. Length of non-complete, business scope, and geography are all critical components of non-competes.