Defining the target.
WHAT TO ESTABLISH BEFORE LOOKING
What you actually want from ownership What you can fund What you are competent to run What size of business suits you Which sectors you understand
WHY COMPETENCE MATTERS MOST
Buying a business you cannot run is how acquisitions fail quickly.
WHAT TO ASSESS HONESTLY
Whether you can do the owner's job.
WHAT TO PREFER
A sector you know.
WHY
Industry knowledge is what lets you assess whether the figures are plausible.
WHAT TO CONSIDER ABOUT SIZE
Whether the business can support a manager, or requires you.
WHY IT MATTERS
A business too small to employ management is a job you purchased.
WHAT TO ESTABLISH
Whether you intend to work in it or own it.
WHAT TO LOOK FOR
Recurring rather than one-off revenue Customers spread rather than concentrated Profits that are genuine and documented Systems that exist independently of the owner A market that is stable or growing
WHAT TO BE CAUTIOUS OF
Businesses dependent on one customer Businesses dependent on the owner's personal relationships Declining sectors Businesses requiring immediate heavy investment Anything with regulatory problems
WHY OWNER DEPENDENCE MATTERS MOST
It is the commonest reason an acquired business collapses after completion.
HOW TO TEST IT
Ask what happens when the owner is away for a month.
WHAT TO ESTABLISH
What you are buying that survives the owner leaving.
