Over the past few months I have been working clients that are transitioning from one daily lifestyle routine to another. This transition is based on my client’s desire to purchase an established business to own, operate and manage for their future. There are many critical factors you need to consider during this process.
As a business attorney, my contribution in this process to identify and secure the right business is usually filled with requesting, receiving and reviewing documents and information in order to complete the due diligence necessary to determine the value and legitimacy of the business being acquired. A must for any responsible business attorney working on your behalf is to review materials presented by the seller and validate statements and claims by the seller regarding the business, its operations and financials, in order to make sure that what is stated by the seller is reliable and accurate.
For example, if the seller claims that the company makes millions of dollars designing and manufacturing toys for pets my job is to review documentation and information about the company and verify that they actually make toys for pets and that the business possesses all of the required physical assets and relationships with suppliers, wholesalers, vendors, and employees required to operate, manufacture, market and sell toys for pets. Planning and conducting an actual visit to the business to see the operation in full swing is also valuable. If you don’t see things operating the way the seller has stated the business operates you should be cautious and dig deeper. My rule of thumb is you pay for what is verified, not speculated.
Another important factor in finding the right business should be to identify a business that also meets your own personal goals of time commitment, financial reward and lifestyle for you and your family. Identify which criteria is the most important one for you. Are you looking to slow down or are you finally breaking free from a job and desiring to build your empire? Is a 50 hour work week unrealistic for you or are you looking for a business that is on auto pilot? I recently had a client sell his 9 a.m. to 5 p.m. business in order to purchase a country western bar that requires his work hours to be 8 p.m. to 5 a.m. I find that serial entrepreneurs certainly understand the type of sacrifice and time commitment needed to own and manage their business. However, they also know the freedom and rewards of being their own boss.
The message here is to do your homework, both mentally and physically, when buying a business by asking yourself whether or not this business is right for you. Only you know whether or not you want to be doing the activities required day in and day out to ensure its continued success. Make sure you thoroughly know everything there is to know about the business and you feel 100% comfortable with all of the aspects of the business. Listen to your trusted advisors after they complete their review of the business so that you are fully aware of the pros and the cons of the business. A final word of advice is to make sure that the business
you are looking to acquire fits your goals and dreams for yourself as well as your family. Entrepreneurship and business ownership can bring tremendous opportunity but realize the costs ahead of time and plan accordingly
Ian M. Berkowitz is a former attorney/
advisor with the United States Small
Business Administration in Washington
D.C. working in the areas of disaster
relief, government contracting and
government nancing. Ian was also
In-House General Counsel for an
institutional broker dealer. Over the
last 20 years, Ian has been in private
practice in Boca Raton concentrating
on business and corporate law,
securities and real estate. In addition
to his law degree, Ian also holds a
Master Degree in Government from
The John Hopkins University.
BERKOWITZ & ASSOCIATES, P.A.
2101 NW Corporate Boulevard
Boca Raton, Florida 33431