You are looking to get into a new line of business or rapidly grow your own business, the easiest way for some to do this is to buy an existing business.

When purchasing a business, you need to know that the details and analysis of what you look at and for will differ on the industry you are buying.

  • Nursing home – occupancy and capacity – cost per bed
  • CPA – tenure of clients/age/price flexibility
  • Manufacturer production ratios and capacity

I had a manufacturer buy an existing business; he found an owner that just wanted out.  He bought it for bottom dollar and got the owner to self-finance the deal. The cost savings really kicked in with the closing of the old location and inserting it into his existing building.  His savings on this item alone was $40K a year in rent.

I am currently in discussion to buy another practice; we are looking at a two or a three-year buyout based on gross revenue.

I have one client looking at purchasing another client, they have yet to come to terms, but the manufacturer wants to walk away clear, but the debt load is a problem for the payback period and return on investment.  Especially based upon the product.

The payback period has to be within a few years, otherwise it is probably not worth the inherent risk. The investment has to have a reward.

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