How to avoid losing customers when buying a business

Posted by James Price | JPAbusiness on 14-Jul-2021 02:00:00

There are a number of risks when buying a business and one of them relates to key customers taking flight in the early stage of the transfer.

In doing your due diligence it’s wise to look at customer concentration risk. Where you have a significant concentration of one or two customers, in particular, you should try and protect against that risk.

Here’s an example of how purchasers can use a ‘hard’ provision to protect against this risk in the final contract:

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Topics: Customers and Clients, Buying a business, Customers, business advice, selling a business, risk management, James Price, JPAbusiness, Parramatta, Central West NSW, business sale, business sale transaction advisor

Do I have to pay GST when buying or selling a business?

Posted by James Price | JPAbusiness on 16-Jun-2021 02:00:00

When working with clients who are either buying or selling businesses, we’re often asked: ‘Will I have to pay GST?’

The short answer, according to the Australian Tax Office (ATO), is:

No GST is payable on the sale of a going concern if certain conditions are met. (A ‘going concern’ is a business that is operating and making a profit.) However, as the seller, you may be able to claim input tax credits for GST you paid on expenses relating to the sale.

Of course, it’s never as simple as one paragraph when it comes to tax, so we’ve asked our business analyst Shirley Jin, who is also a CPA, to clarify those ‘certain conditions’ mentioned, and when you can and can’t claim input tax credits for GST paid on sale expenses.

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Topics: Buying a business, business advice, selling a business, Business advisor, James Price, JPAbusiness, Parramatta, taxation, GST, Central West NSW, tax advice, goods and services tax

Should I buy a business to get myself a job?

Posted by James Price | JPAbusiness on 09-Jun-2021 02:00:00

The short answer to this question is yes... and no.

Buying a business that provides you with a good job is definitely a worthwhile strategy, as long as it doesn’t just provide you with a job.

If you own a business, what are the main risks you will be taking?

  • Operational risk – As a business owner you count on your systems and processes to work in a predictable manner and accept the risk of those systems and processes failing. For example, your safety system could fail and cause injury to an employee, or your manufacturing system could break down, causing you to default on a major customer contract.
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Topics: Buying a business, business advice, Business advisor, business ownership, business broker, James Price, JPAbusiness, Parramatta, financials, redundancy, buy a business, Central West NSW, business sale transaction advisor, business transaction advisor

How to ensure you get good advice when buying a business [case study]

Posted by James Price | JPAbusiness on 19-May-2021 02:00:00

A few years ago we worked on a business sale transaction in which one side had far less robust advice than the other – you can guess which side was which!

Our client – the vendor – was selling a reasonably large, engineering-style business.

The purchaser – while a successful business operator – was not experienced at acquiring businesses and did not appear to have thought deeply about the sort of expertise they would need to advise and guide them.

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Topics: Buying a business, Advice, Case study, business buying, Business advisor, business broker, risk management, James Price, JPAbusiness, Parramatta, client case studies, buy a business, Central West NSW, business buyer

What is 'strategic' value when buying or selling a business?

Posted by James Price | JPAbusiness on 12-May-2021 02:00:00

Strategic value is the value a purchaser is willing to pay for a business, over and above what an impartial business valuer might determine is ‘fair market value’.

As we have discussed in our eBooks, one common method of determining a business’ fair market value is to use a multiple of earnings.

Multiple of Earnings is the term for how many years or months a purchaser is prepared to wait before they recoup the value they paid the outgoing business owner, based on an assessment of business maintainable earnings (or sustainable earnings).

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Topics: Business Value, Buying a business, Selling your business, Template, strategic value, Checklist, business advice, Business advisor, business valuer, JPAbusiness, Central West NSW, business sale transaction advisor, business value drivers

Due diligence warning signs [video]

Posted by James Price | JPAbusiness on 14-Apr-2021 02:00:00

When it comes to buying a business, it’s generally advisable to conduct a thorough due diligence on the purchase opportunity.

Due diligence is designed to identify any material issues which are likely to impact the value proposition of the business opportunity you are considering. It's usually conducted once you've secured a binding position on price a position which may be subject to your detailed due diligence.

Every due diligence is different, and should be treated as such, but – as I outline in this video – there are some warning signs you should watch out for in any due diligence process.

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Topics: Buying a business, Advice, Due diligence, Template, Video, Business advisor, business broker, James Price, small business, JPAbusiness, Parramatta, Central West NSW, business buyer, business transaction advisor, due diligence checklist

Pirtek franchise opportunity

Posted by James Price | JPAbusiness on 24-Mar-2021 02:15:00

JPAbusiness is excited to offer business buyers the opportunity to become part of a world-renowned and respected brand.

Pirtek was founded in Sydney in 1980 and is now the world’s leading supplier of premium fluid transfer solutions products and services, including hydraulic hose and fittings.

We have been engaged by the Director of Pirtek Gunnedah to identify potential buyers for this successful franchise.

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Topics: Business for sale, Buying a business, James Price, investment opportunity, JPAbusiness, mining services, business sale, business sale transaction advisor, franchise opportunity, business acquisition, Pirtek, Pirtek franchise

How to use the Buying a Franchise Planning Sheet to assess opportunities

Posted by James Price | JPAbusiness on 24-Mar-2021 02:00:00

Buying a franchise may, on the surface, seem like any other business purchase.

However, a franchise is a special type of business in which the brand and business operational model has been systematised.

A franchise may have additional, more complex requirements for a buyer to consider and meet, but they also tend to come with more ongoing support than regular businesses.

We have created the JPAbusiness Buying a Franchise Planning Sheet to help business buyers assess potential franchise opportunities.

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Topics: Buying a business, Free download, Template, Franchises, Business advisor, business broker, buying a franchise, James Price, JPAbusiness, Parramatta, Central West NSW, business sale, business sale transaction advisor, franchising

5 tips for business buyers [video]

Posted by James Price | JPAbusiness on 24-Feb-2021 02:00:00

The following video features 5 tips that will help you take a planned and measured approach to what may well be one of the biggest financial investments of your life.

They're each important in their own way, but I must admit Tip 2 – 'Have passion for the opportunity' – is a key one for me.

Owning a business can be difficult at times, but it's easier to withstand those challenges if you have a 'fire in your belly' for what you do.

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Topics: Buying a business, Business Planning, Video, business advice, Business valuation, Business advisor, James Price, valuing a business, Parramatta, Central West NSW, business sale transaction advisor, business value drivers

How to avoid losing key staff when buying a business

Posted by James Price | JPAbusiness on 03-Feb-2021 02:00:00

There are some common 'people-related' risks associated with business purchases, particularly in small to middle-sized businesses that are substantially dependent on an owner or a few senior employees for their success.

Two things can happen if those personnel aren’t retained in the business in an active way:

  • the business’ relationships with customers and suppliers may deteriorate; and
  • the employees’ know-how and corporate knowledge will be lost.

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Topics: Buying a business, Business transfer, staff management, business advice, Business advisor, business management, James Price, JPAbusiness, Parramatta, Central West NSW, business transaction advisor, human resources

 
Disclaimer: The information contained in this blog is general in nature and should not be taken as personal, professional advice. Readers should make their own inquiries and obtain independent, professional advice before making any decisions, taking any action or relying on any information in this blog. 
 
 

 

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