What to Watch for When Buying a Business

There are tons of articles about selling a business. What if you’re buying a business? Here are a few quick suggestions to keep you on the right path.

Valuation
Needless to say, it’s one of the reasons you’re here and reading this. You need to know the value of what you’re buying and whether you’re paying a reasonable price. Find an expert certified in valuation who can help you. More on this here and here. The language of valuation starts with…

Accounting
Many sellers are maximizing tax deductions instead of profits. Many sellers also have terrible bookkeeping. More on these issues here and here. What key accounting metric should you be looking for? Simply stated…

Cash
The business should be generating cash flow and it should be consistent. If it isn’t, should you walk away? Maybe not. Find out why. There are two other elements that will make or break a business and often outweigh everything else…

People and Culture
Good people can take a business to unimaginable heights. One bad person can wreck the entire business. Find out what kind of people and culture you’re considering buying…before you buy it. More on this here. 

The Bottom Line
It can feel a little lonely if you’re thinking about buying a business. Professionals tend to beat a path to sellers, possibly thinking they’ll get a piece of the deal. If you’re buying a business, review these suggestions, take your time, and please ask for help. I’m here if you want to talk.

Thanks,
Josh

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Can I Help You?
Hi, I’m Josh Horn, CPA/ABV, CVA of Horn Valuation. I help with business valuations in friendly or unfriendly situations. I also help owners build valuable companies. My clients are business owners and attorneys. If you’d like more information, check out my website hornvaluation.com, email me at josh@horncpa.com, or call me at 217-649-8794.

Josh Horn CPA

I’m a licensed Certified Public Accountant (CPA) and double-credentialed in business valuation (CVA & ABV). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and been the primary advisor to multi-million dollar and small companies in various industries.

“If you’re not working on business value, who is?” Josh Horn, CPA, Certified Valuation Analyst and Accredited in Business Valuation

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