The entrepreneurial spirit is alive and well in South Florida. I have recently met with many people who have decided to take control of their futures by becoming business owners, either for the first time in their lives or after retirement. Although the reasons may be diverse, they are all looking to exercise their entrepreneurial muscles.
In my opinion, there is no better time to buy a business. First and foremost, record numbers of baby boomers are retiring and offering their well-oiled machine businesses to the highest bidder. Many baby boomers never considered a succession plan and don’t have a family member available to take over. For
these hard-working entrepreneurs, the priority is their legacy over cashing out. These entrepreneurs have created a tremendous opportunity for serious-minded buyers to take advantage of acquiring a solid business with a strong foundation. Many of the buyers that I represent are looking for a business that is well-developed and managed with a good history and even better cash flow. Generally, most baby boomers can deliver that type of a business.
Over the last few years, I have seen a substantial amount of quality businesses for sale. As a business attorney, my time has been filled requesting and receiving documents and information in order to complete my due diligence on these acquisition targets for my clients. In my opinion, the single most important thing needed to start the process of buying a business is for a well-qualified transactional attorney to uncover the real facts as opposed to the “facts” provided by the seller or a broker.
For example, if a company makes toys my job is to review documents and information about the company and verify that they not only make toys but that they have agreements with suppliers, wholesalers, vendors, employees, and any other groups necessary to operate, manufacture, and sell their nalized products. Just stating it as “fact” is just not enough. A very big part of due diligence also includes reviewing and verifying financials to confirm that they are complete, accurate and can be relied upon by the buyer.
Based upon an informal survey I have conducted with my clients, the most important criteria used by prospective buyers to evaluate the purchase of a business are the personal lifestyles afforded and the financial rewards gained for themselves and their families. Most entrepreneurs take into consideration and evaluate the time, effort, sacrifice and reward in owning and operating their newly-acquired business. Does the business demand more or less time than what they are
presently used to? Do the hours and schedule needed to run the business create a challenge for their present lifestyle? Is the financial reward for all of this additional liability and uncertain security worth the risk? Only the buyer can make that decision. The most important item to remember when going down this new and exciting path of buying a business, is to do your homework and ask yourself whether or not this specific business is right for you.
Only you know whether or not you want to be working day to day in that business. Make sure you thoroughly know everything there is to know about the business and you feel 100% comfortable with all aspects of the business. Be fully aware of the pros and the cons of the business and its lifestyle. Finally, make
sure that the business you are acquiring fits your goals and dreams for yourself as well as your family. Entrepreneurship can bring tremendous opportunity but realize the costs and benefits 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 financing. 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.