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How to Buy a Business in Massachusetts

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How to Buy a Business in Massachusetts

Buy a Business in Massachusetts

Buy a Business in Massachusetts | Buying a business can be an easy decision for you, however, execution of the idea may not be a simple process. It takes careful planning, due diligence, financial consultation, and negotiations to buy an existing business.

How to Buy a Business in Massachusetts?

A business can be put on sale for many reasons. A smart seller would sell a business when it’s making profits, not losses. However, the process of buying an existing business can be a tricky one.

Let us guide you through the process if you are willing to buy a business in Massachusetts.

What Type of Business Do you Want to Buy?

Before you begin the process, explore your interest in buying an existing business. Try andbuy a business in Massachusetts balance the factors of interest and profitability here. A business of your interest may not be a profitable one in your locality. You may decide to buy an online business or a conventional brick-n-mortar business. Once you’ve decided, you can move on to the next phases.

Search for on Sale Businesses

Once you know which type of business you are looking for, it’s easier to search for on-sale businesses. There are different platforms and mediums that you can use to find out the right type of business on sale. For instance, explore online marketplaces such as bizbuysell.com, craigslist, etc.

You can also use professional business brokers to find an ideal business for sale as well. Business brokers have the advantage of working with clients on both sides of a transaction. 

Analyze What’s Included in the Price

There are different business valuation methods. A seller would use and present a valuation method that suits its pricing strategy. As a buyer, you must evaluate what comes with the price tag.

A careful analysis must reveal a clear picture of the business price. You must analyze the growth opportunities, asset valuations, operational efficiency, and intangible assets of the business on sale.

Dig Deeper to know why the Business is on Sale

It’s a common notion to think that every business sells when it incurs losses. Smart sellers do not sell when they incur losses, they do when the business makes money. However, you must dig deeper to find out the reasons behind the decision.

A seller may want to sell a profitable business in an aging industry. Perhaps, the business has become an outdated idea. Sorting out the reasons behind the move can help you make a better decision when you buy a business in Massachusetts.

Consult a Business Broker Before You Bid

Many investors think buying a business isn’t as a complex task as selling one, hence they pursue the process. Consulting a business broker can ease the process of buying a business in Massachusetts for you.

A business broker has the expertise and knowledge of transaction advisory. As we discussed above, it requires a thorough investigation to know the real reasons behind selling a business. Similarly, business valuation, negotiation, integration, and closing a deal can be daunting for you. Seeking help from a professional can safeguard your financial interests. The financial benefits of making the right investment outweigh the cost of hiring a business broker manifolds.

Perform Due Diligence

Perform comprehensive and thorough due diligence before you bid for an existing business. Evaluation of asking price and valuation process should only become the starting points.

Here is a useful checklist for you to perform due diligence before you buy a business in Massachusetts.

  • Check business registration, EIN, licensing, and permits.
  • Check the local laws and make sure the business is compliant.
  • Ask for tax compliance and filing records.
  • Evaluate the business against regulatory compliance in financial and non-financial terms.
  • Evaluate the business financials comprehensively such as balance sheet, income statement, cash flow, and equity statement. Dig deeper to understand the ratios and key performance indicators.
  • Analyze the business efficiency through its operational, financial, and human capital resource analyses.

Finalize the Deal

Once you’re comfortable with the evaluation process, it’s time to offer the bid. Make it a formal contract and receive the letter of intent from the seller. You can seek help from a professional business broker here to negotiate effectively.

By the time your negotiations are finalized, you should arrange the finances to support the deal. You may need to apply for a business loan and/or rely on private equity here. You must draft the agreement legally to avoid any complications and make it a legal transaction. Remember, you may need professional support during the sale process and in a post-transaction scenario.

Contact AW Business Brokers at (508) 492-8728 to learn how to buy a business in Massachusetts.