buying a business

By Ben Youn

Copyright 2014 Quantum Business House

WELCOME to QUANTUM BUSINESS HOUSE

2 hours for each session 10 minutes tea time Bathroom & Kitchen Today’s Speaker Please network each other Future Plan- Business Forum- Networking Events- Business Mentoring


House Keeping Time

1. Setting up business structure (June 04) 2. Buying a business (June 11)3. Business Planning (June 18)4. Marketing (June 25)5. Raising Finance (July 02)6. Financial Management (July 09)7. Tax system and compliance issues (July 16)8. Risk management (July 23)9. Financial Health Check (July 30)10. Business Evaluation (August 06)


Start-Up Business Seminar 2014

2.Buying a Business

Pros, Cons & Procedures


Saving time and costs for setting up business

- location, equipments and customers- e.g. Franchise café or restaurant Taking over employees, suppliers and

customers- Minimise business disruptions and loss of

revenue. Easier for obtaining finance with track

records- In the case of business take over (not asset

take over type of business purchase)Copyright 2014 Quantum Business House

Why buying somebody’s business?

Costs buying the business would be expensive (Goodwill)

Risks of over-valuation (examples) Risks of taking over an ill-business - Poor relationship with employees, suppliers

and customers - Takes long time to overcome Obsolete stocks and equipments worth

nothing but with your costs


Disadvantages

Finding business for sale- Business Brokers (show your interests)- Merchant banks- Local newspapers- Industry magazines- The internet- Take enough time for searching and

negotiating


Procedures of buying a business

Personal Assessment of your risk profile, motives and your willingness about the business.

Size of the financial involving the purchase Your personal skills and experience - You should have enough experience and

expertise in running the business you intend to purchase.

- General management skills- Joining relevant industry association


Assessment time

Your intentions to buy but not binding agreement (unless it is conditional upon the satisfactory completion of due diligence, raising finance and execution of legal documents)

Purchase price and the calculation base Buying shares or assets The assets and liabilities to be transferred

or excluded. No- Shop clause to protect buyer


Term Sheet

“Let the buyer aware” To satisfy yourself about the business you

are buying – Don’t rely on what the vender says to you.

Professional advice from accountants and lawyers


Due Diligence

Sustainable earnings for the business Potential to improve sales and earnings Are you paying right price? Working capitals Return on investments (ROIs) Sales forecasting Relevant records existing? Major contracts with key employees,

suppliers and customers KPIs met industry benchmarks


Due Diligence

How long the business is in the market for sale?

- The longer the business in the market for sale, you have greater power to negotiate.


Due Diligence

Need to find out the real reason for the sale.- Insolvency?- Retirements?- Moving to other areas?- Environmental change (demographic,

regulation, competition and out of date technology etc.)

- Seller’s intention after sale (A restraint of trade provision)


Why Sell?

Objective way of buying the business at right price

Valuation method is different depending on size and industry

P/E method EBIT method Discounted cashflow method Asset valuation method ROI method


Business Valuation

Please use us as free business adviser Free Initial Consultation Packaged Services with fixed fee


Any other questions?

Business Planning Marketing Raising Finance Financial Management Tax system and compliance issues Risk management Financial Health Check Business Evaluation


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