Buying a business instead of setting up your own

Setting up your own business is not the only way to become self-employed. You can also buy a business.

Buying an existing business has a few advantages: first, as buyer, you can build on what already exists and avoid certain start-up difficulties. You can benefit from a predecessor’s experience, and risks are better known. Second, clients already exist and the company already enjoys a certain reputation in the sector. The business plan may be based on existing figures, which minimizes the risks of incorrect planning.

However, buying a business is not easy. The biggest challenge is probably estimating prior commitments and reaching an agreement with suppliers and clients regarding future collaboration. It is also necessary to ascertain whether infrastructures are still appropriate or whether investments need to be made. And lastly, the buyer needs to agree with the owner on price and guarantees according to risks and future opportunities.

Buying an SME: Questions to ask yourself

Buying a company is a risky operation. The entrepreneur needs to ask a certain number of questions before going ahead with the purchase.

  • Why does the owner want to sell the business?
  • Are these reasons credible?
  • What is the business's state of health (balance sheets, communication, etc.)?
  • Why has the company been successful?
  • What are its medium-term prospects?
  • Are clients satisfied?
  • What does client solvency look like?
  • Will there still be a demand from clients for the product in the future?
  • Are any supplier invoices awaiting payment?
  • Will suppliers continue to make deliveries?
  • What incentives and flexible arrangements do employees enjoy?
  • Which employees are responsible for product quality and development? Can expert employees be kept on board?
  • Can existing contracts be taken over (lease contracts, tenant agreements, licenses, etc.)?
  • Is the site losing its appeal?
  • Are the company's values realistic?
  • Does the sales contract include an explicit exclusion of certain obligations?

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Last modification 27.08.2018

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