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Buying an Established Business

Posted by restrealty on July 31, 2011
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wsjby Sarah E. Needleman – July 31, 2011
(full article available on wsj.com)

Last year, Mark Shelstad set out to become his own boss after concluding that his portfolio-manager job had become unstable. But instead of trying to build a company from the ground up, the Chicago-area resident began searching for an existing one he could buy….

... “It’s a buyer’s market,” says Steven Zimmerman, president of Restaurant Realty, a business brokerage in Corte Madera, Calif.

While he acknowledges that some firms are priced lower today because they’re struggling to survive — and not just because the owner wants to retire or relocate — Mr. Zimmerman says such investments are still worth considering. “A buyer may be able to turn a problem into an opportunity,” he says….

… What’s the cost? Business brokers are typically hired by the seller so there is normally no cost to the buyer.

Do your homework. Before contacting brokers, determine the kind of business you’d like to buy. Research different industries and business types….

…Be honest. Let brokers know what you realistically can afford. “If you dance around finances, it’s a waste of everybody’s time,” says Scott Evert, president of Sunbelt Midwest, a business brokerage. Besides, brokers and sellers “are going to do due diligence on you anyway.”