Buying a Business

1. By Ben Youn
Copyright 2014 Quantum Business House
WELCOME to QUANTUM BUSINESS HOUSE

2. 2 hours for each session
10 minutes tea time
Bathroom & Kitchen
Today’s Speaker
Please network each other
Future Plan
- Business Forum
- Networking Events
- Business Mentoring
Copyright 2014 Quantum Business House

3. 1. Setting up business structure (June 04)
2. Buying a business (June 11)
3. Business Planning (June 18)
4. Marketing (June 25)
5. Raising Finance (July 02)
6. Financial Management (July 09)
7. Tax system and compliance issues (July 16)
8. Risk management (July 23)
9. Financial Health Check (July 30)
10. Business Evaluation (August 06)
Copyright 2014 Quantum Business House

4. Copyright 2014 Quantum Business House

5. Saving time and costs for setting up business
- location, equipments and customers
- e.g. Franchise café or restaurant
Taking over employees, suppliers and
customers
- Minimise business disruptions and loss of
revenue.
Easier for obtaining finance with track records
- In the case of business take over (not asset
take over type of business purchase)
Copyright 2014 Quantum Business House

6. Costs buying the business would be
expensive (Goodwill)
Risks of over-valuation (examples)
Risks of taking over an ill-business
- Poor relationship with employees, suppliers
and customers
- Takes long time to overcome
Obsolete stocks and equipments worth
nothing but with your costs
Copyright 2014 Quantum Business House

7. Finding business for sale
- Business Brokers (show your interests)
- Merchant banks
- Local newspapers
- Industry magazines
- The internet
- Take enough time for searching and
negotiating
Copyright 2014 Quantum Business House

8. Personal Assessment of your risk profile,
motives and your willingness about the
business.
Size of the financial involving the purchase
Your personal skills and experience
- You should have enough experience and
expertise in running the business you intend
to purchase.
- General management skills
- Joining relevant industry association
Copyright 2014 Quantum Business House

9. Your intentions to buy but not binding
agreement (unless it is conditional upon the
satisfactory completion of due diligence,
raising finance and execution of legal
documents)
Purchase price and the calculation base
Buying shares or assets
The assets and liabilities to be transferred or
excluded.
No- Shop clause to protect buyer
Copyright 2014 Quantum Business House

10. “Let the buyer aware”
To satisfy yourself about the business you are
buying – Don’t rely on what the vender says
to you.
Professional advice from accountants and
lawyers
Copyright 2014 Quantum Business House

11. Sustainable earnings for the business
Potential to improve sales and earnings
Are you paying right price?
Working capitals
Return on investments (ROIs)
Sales forecasting
Relevant records existing?
Major contracts with key employees,
suppliers and customers
KPIs met industry benchmarks
Copyright 2014 Quantum Business House

12. How long the business is in the market for
sale?
- The longer the business in the market for
sale, you have greater power to negotiate.
Copyright 2014 Quantum Business House

13. Need to find out the real reason for the sale.
- Insolvency?
- Retirements?
- Moving to other areas?
- Environmental change (demographic,
regulation, competition and out of date
technology etc.)
- Seller’s intention after sale (A restraint of
trade provision)
Copyright 2014 Quantum Business House

14. Objective way of buying the business at right
price
Valuation method is different depending on
size and industry
P/E method
EBIT method
Discounted cashflow method
Asset valuation method
ROI method
Copyright 2014 Quantum Business House

15. Please use us as free business adviser
Free Initial Consultation
Packaged Services with fixed fee
Copyright 2014 Quantum Business House

16. Business Planning
Marketing
Raising Finance
Financial Management
Tax system and compliance issues
Risk management
Financial Health Check
Business Evaluation
Copyright 2014 Quantum Business House