Buying a business after the event of a pandemic requires professionalism and due diligence. However, some aspects of the process will be unique to your particular situation. This guide will help you with what you need to know about finding and buying an existing company in a post-pandemic world, ensuring that your business stays afloat even after the worst has happened!
1. Create a List of Potential Businesses and Do Research
There are many ways you can make money even after the pandemic if you are brave enough. You could try buying an existing business that interests you. As always, it is essential to know your needs, then make a list of your potential candidates, and research them before making any commitments.
Whether you’re looking into a bakery, convenience store, auto repair shop, barber shop, animal petting zoo, or other local businesses, spend time researching them. It will enable you to understand how it operates, and its competition behaves. When buying a business, consider location, demographics, and price points when deciding which option is best for you. You may want to consider the services of a business adviser to help you navigate all the options and find out what is right for you.
2. Consider Your Affordability and Financing Options
The first step to buying a business post-pandemic is assessing your affordability. If you’re cash-strapped, the best option is often taking on debt. You’ll need to think about how much you’ll be able to afford each month and then see what sort of loans are available in that range. The second step is figuring out what financing options work for you. Do you want an asset-based loan? What about revolving credit? Is cash enough for you, or do you need something more substantial?
Remember, post-pandemic financial institutions might not be operating at total capacity, so it’s essential to figure out where you stand with them before buying a business post-pandemic. Many of these sorts of loans require collateral, so you may also have to look into securing property if this is part of your plan. Of importance is to ensure that you can afford the terms and that there are no hidden terms or fees associated with any of your choices when you’re looking at borrowing money.
Keep in mind that interest rates will change over time which can alter how your payments look after a few years. A finance broker might come in handy at this point because they know all the different lending sources and are used to helping people navigate their way through the fine print involved.
3. Complete an Expression of Interest (EOI)
Once you’ve identified and settled on the business to purchase, it’s time to make an offer and complete an Expression of Interest (EOI). It’s best if your contact is knowledgeable about the purchase process. A professional broker can also help you with this step. They will help ensure that your offer is competitive and legal, as well as any other details related to due diligence.
The EOI includes basic information, such as how much cash you are willing to pay for the business and your financing options. Proving your ability to fund your proposal is key to completing an EOI. You may have found a company that needs cash, but they’ll want assurance that they’ll be able to get paid after closing the sale. For example, they may ask for proof of funds or a letter from your lender stating their willingness to fund the purchase should you qualify during due diligence.
4. Transfer of Ownership
After completing the EOI, the next step involves the transfer of these details to a letter of intent (LOI) and finally to a sale contract. LOIs are often non-binding. Buyers should ensure they have adequately researched their target company and understand what they purchase before signing an LOI or a purchase agreement. A contract of sale sets out key terms such as the price, conditions of sale, warranties, covenants, representations and remedies relating to the transaction.
For example, a buyer can include in the contract that the seller will remain with the business for a while after the deal to train new management staff on their knowledge base. Another example is where a seller agrees not to compete with the buyer for a set period to allow enough time for establishment.
At this point, you need to make your deposit, and due diligence is crucial and having a good lawyer is very important. Your lawyers’ job is to identify any potential problems in the business you might be buying and either negotiate them away or get them fixed up for you, including withdrawing from the negotiations and taking legal recourse.
5. Settlement and Handover
The Handover is the essential part of buying a business, especially post-pandemic. Make sure you have all the necessary documents and information from the seller ready before you sit down with them. However, it’s crucial not to purchase one in an area where you are not permitted to work. A business coach can help you navigate this essential last stage without fear or confusion. Once you’ve completed the transaction take control!
It’s possible to buy a business even after a pandemic has affected the markets, but you’ll need to plan carefully. Whether you’re looking for a hardware store, bike shop, or catering service, your best bet is to research and then talk to professionals like financial brokers, lawyers, and a business coach. It pays if you work with professionals, they will know what questions to ask of potential sellers and how to negotiate an agreement that suits your needs.