Buying businesses

By THIS IS MONEY
Updated:

 

I am considering buying a small, established business. How can I get a reasonable valuation for it and how should I approach the current business owner to open negotiations?RI, Southampton.

Maurice Fitzpatrick at accountants Numerica says: Getting a reasonable valuation for a business is rather like buying a house - you look in the appropriate trade press to find out the typical selling price of similar businesses.

This will give you an idea of market prices. Then if you find a business you are interested in, approach the owner, making clear you are a serious buyer, and mention a potential range of prices based on the research you have done.

On the back of that, ask for the accounts going back over the last three years, plus as much detailed information

as you can, so as to form a view as to whether you want to buy and what you will pay.

Get professional advice once you have the financial information because the professional may be able to add to the list of information you are gong to ask for. Ask a local accountant for advice - a personal recommendation would be a way to choose the right one.

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