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How To Investigate Any Business Opportunity
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Is there a good reason why commercial lenders would not approve my loan request?
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Is the seller so interested in getting out from under the business that he will take an unwise risk?
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Am I sure the business is as good as it looks?
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Can the business support the debt payments to which I am obligating myself?
In the light of Sam's experience, the seller, too, should pause long enough to answer some questions
before he accepts an extended- payment plan.
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How serious will it be if the buyer is unable to make his payments?
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What security do I have to protect my position?
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How capable of operating my business successfully is the buyer?
Contracts and Implementation
Every step so far in this discussion has involved forecasting. From motivation to finance the buyer and
the seller must anticipate characteristics, developments, and problems that may develop. The contract
between the parties embodies the resulting basic agreements about the business and the relation be-
tween buyer and seller. A "good" contract is meaningless if the earlier steps in the process have been
carried out carelessly or not at all.
Determining The Value Of A Business
The most difficult step in buying or selling a small business is probably determining what the business is
worth as a going concern.
Many judgment decisions must be made. Yet before negotiations can continue successfully, a value
must be established. The value must be acceptable to both buyer and seller, or further negotiation is
fruitless.
It must result from the logical and objective efforts of all the parties involved.