Doesn’t matter if you are buying a business for sale as it is equally a start-up situation. As a business closes down, the selling price depends on its asset transfer value. There are times when business people agree to pay even a huge premium for an empty shop if it is in a good location.
Asset sale typically takes place in poor locations instead of the prime business spot. Get a list of all the business assets, like stock and do the trading when they you think they are worth. However, the item that requires replacement isn’t worth. You must have the following information for fixed assets;
- Asset description,
- Purchase price,
- Estimated life,
- Date of acquisition,
- The net book value of the asset,
Be watchful enough when buying a business as the sellers often try to pose their business as a growing concern, even though they are not trading. If you see that happening, make sure to check the business at different times of a day. Also, ask the sellers why they want to sell the asset. Generally, the sellers sell their assets because of these reasons;
- Partnership problems, burnout, or wanting a change in the lifestyle. This is quite common in restaurant and bar businesses;
- Poor business or issues with the landlord;
- The seller has developed a start-up and wants to enjoy the capital gains by taking holiday, and then begins all over again;
- The vendor is not serious about selling. However, he can do so for a high price;
- Retirement;
Be prepared to get weird answers. However, don’t forget to conduct due diligence.
