They may however, be selling a business:

That is experiencing a quiet period, that is going through a change of focus, that is just starting to recover from a mini-recession or perhaps a struggling business that has introduced new product lines that take time to establish themselves.

We have more than 35 years’ in the business world, helping to purchase businesses, helping to ensure proper and effective checks and balances are in place for those looking to buy a business.

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There are many other reasonable explanations as to why turnover, sales or profit or perhaps all 3 are declining for a business. It would be unusual for a seller of a business to declare that they are selling because the business is struggling, but in reality, that is the main reason for their selling of a business; that it is indeed a struggling business.

It is crucial, when purchasing a struggling business that you have the best professionals on hand and that you are carrying out the necessary due-diligence.

Buying a Struggling Business – What to Consider

The first step in buying any business is to look at the figures. One can do that oneself, or through Accountants/Lawyers/Business Advisors and from those figures, it will be relatively easy to see how the business has been performing. The Sellers will also provide projections, which will invariably show that the situation is going to start improving. There may several reasons given for this:

  • The business in question is just beginning to turn a corner
  • They have new customers about to come on board
  • They are negotiating better prices from suppliers

purchasing-businessAll of these are potential positives, but no one can predict with any certainty that any of these projections from the seller will happen, or that they will produce the desired results. In reality, historical figures in decline (irrespective of projections) defines a struggling business.

Once it has been established, that the business the buyer is considering purchasing is in fact a ‘struggling business,’ there are a number of potential actions to take:

  • Walk away from the deal
  • View it as an opportunity to pay a lower price for a potentially lucrative business
  • Dig deeper into the figures and the projections to try to discover how deep the problem really is

All three options make sense, and the challenge is to determine which is most relevant to any particular business in each case.

Why do Businesses Sell Up?

Many businesses that are for sale are indeed struggling, and that is very often the reason for why they are for sale at all. Many of them provide good, potentially prosperous opportunities for potential buyers, as long as the buyer is going in with their eyes open.

It is critical that the buyer, with the help of advisors, knows exactly what are the weaknesses of the business, and can see an approach that may well improve the situation. With careful investigation, and an honest acceptance of the problems, a struggling business can be a very good opportunity for a capable buyer to turn things around and create a successful business.

Purchasing a Business that is Struggling – Get in Touch

Advice to Buy has over 35 years’ experience in helping business buyers purchase struggling business in the UK and around the world. For further information and to get started:

Call Us – 0203 807 3886

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