Purchasing a business in Colorado can be lucrative if you do some due diligence. Knowing the steps to take when you get to this point can be critical. Below, you’ll find the information you need to make this process easier and more efficient.
Gather an advisory team together
The first step in the process of purchasing a business is to get a team of business advisors together who can offer legal, financial, and accounting advice and evaluations. Depending on the business you’d like to buy, you may even need to work with a business broker.
Perform due diligence on the business
Next, it’s essential to perform due diligence on the business you’re considering buying. Performing the following activities can help give you a preliminary investigation of its operations and potential:
- Talking to staff, customers and workers
- Checking out the competition, financials and advertising costs
- Looking at potential repairs or modifications
- Understanding if there are any ADA or OSHA requirements
- Examining the cash flow potential, monthly gross income for the last three years, fixed expenses, employment data and the potential for profitability
Signing a letter of intent and negotiating terms
After performing due diligence on the business and the potential looks good, you’ll likely want to sign a letter of intent to secure your interest. Doing so lets the owner know your intentions and opens the door for negotiating terms. Being fully prepared with a realistic price for this step in the process after you decide to buy the business is critical.
Closing the deal
If you and the business owner negotiate a fair price, closing the deal is the final step to take. This action typically involves signing a bill of sale and purchase agreement. Following these steps for buying a business should be helpful when you’re searching for an opportunity matching your circumstances.