Estimation
Having found the potential seller, it is necessary for you to learn in accuracy
what exactly is on sale, and to define, how many it is necessary to pay.
First of all it is necessary to define, why business is on sale. To you can with
readiness inform the reason designated by the seller, but it is the reason
unessentially it will appear the real reason of sale. Try to learn, that
actually occurs - talk to other people possessing the information on business
which you are going to buy.
The price of business is in direct dependence on ability of the given business
to generate the income. The estimation of the operating enterprise refers to as
an estimation of businessat existing use.
The real value of business depends from it of the income. It is necessary for
you to see history of incomes of the company during several years. It will allow
to define aggregate profits, expenses and profit. Investing money in purchases,
you actually buy annual profit. One of ways of an estimation of possible
purchase - an estimation of efficiency of the investment.
Defining a real value of the given business, you should not limit yourselves to
consideration of the list of the property offered by the seller, or its reasons
of relative how to estimate the given business.
Your researches should begin with the requirement of financial reports for last
three years. Who prepared these data? Whether was audit is lead? Even in case
financial reports are certified by auditors, do not forget, that decisions of
auditors depend on documents which are given to them. Behind the formal
statements signed by the bookkeeper, the other information can disappear a lot
of.
You can lead own audit, and ask the seller about the sanction to check up all
documents of the company:
Records about deposits,
Accounts,
Documents on salary payment,
Records about sales and so on.
The above-stated documents will give to you much more information on a condition
in which there is a given business. You should sign the agreement on
nondisclosure of the received commercial data, but you receive a real picture of
a condition of your possible purchase. If records are separated and not
systematized, it is necessary for you to estimate, how many work actually it is
required for reduction of the documentation the order, in case of if you are
solved on purchase. According to your estimation, the demanded price should be
reduced.
The best way of acquaintance with affairs - within several days to be present at
office, and own eyes to see, how the given mechanism works. As a rule, after
similar check the potential buyer has an opportunity to receive real data on
considered business.
05.05.2007. 16:40
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