Tag Archives: credibility

WHO BUYS COMPANIES AND WHY

If you are buying a business for the first time, you will find that buying a business is a unique experience that requires extensive knowledge and skills in a broad spectrum of areas–legal, accounting, banking, financing, understanding of government regulations, especially in areas of environment, safety and employee relations.  You must learn how to obtain and screen leads, how to evaluate and price prospective companies, and how to conduct due diligence. But even highly experienced entrepreneurs who have completed dozens of deals still rely upon professional expertise for certain phases of the process.  Thus expect that even after you learn more about the deal-making process, you will still need to hire consultants to assist you in making a successful purchase.

Buying a company is very demanding because it is an intellectual, pragmatic and emotional process, all in one. It is an intellectual process because to be successful you have to think it out.  It is a pragmatic process because you have to be realistic about the company you are looking to buy, whether it is worth buying, what its real value is, and what it should be priced at. And buying a company, finally, is an emotional process.  Throughout negotiations, beginning with first contact with the seller and continuing through to the closing of the sale, you experience tremendous highs and lows. You must be able to handle both extremes of emotion. You must handle the highs, so as not to reveal your enthusiasm to the seller, and after the lows, to be able to come back and find a solution to the problem that might otherwise kill the deal.  The emotional component holds true even after many deals but you do learn to control those emotions with practice.

Reasons for Buying Your Own Business

Some of the reasons for buying your own business are similar to those of any entrepreneur: to control your own destiny; the personal challenge, making money, the satisfaction of building and running something on your own. Continue reading WHO BUYS COMPANIES AND WHY

Your Credibility

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By Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation

This is the 4th of a Series of 15 short articles on “HOW TO BUY THE RIGHT COMPANY” They will be posted at one a week

Credibility is a very important aspect of success in purchasing a company. Many of the issues important to establishment of credibility for one constituency may also apply to some of the other groups. Looked at altogether, the following issues are likely to help you to establish trustworthiness and believability in your proposed venture with the business community and the community at large:

  • That you are serious enough about making the deal that you are devoting significant resources and effort to this venture. If you are a first time buyer, full-time dedication to this venture will contribute positively to your image.
  • That you have reasonable qualifications for running the business, such as an M.B.A., appropriate work experience in a related industry and/or directly transferable management experience.
  • That you are clear about your vision for the company and can communicate why you will be more successful than the present owner in the case of an underperforming firm, or at least as successful as the present owner in a well performing firm.
  • That when approaching the bank for a loan, you have the necessary amount of equity to support the loan.
  • That you have equity partners who are considered credible themselves, either as savvy, experienced business people and/or as investors in previously successful deals.

Continue reading Your Credibility

Building credibility for business ownership

DRJOHN2Dr. John Psarouthakis, Executive Editor, www.BusinessThinker.com. Founder and former CEO, JP Industries, Inc, a Fortune 500 industrial corporation. Adjunct professor, Strategy and Acquisitions, Ross School of Management, University of Michigan

This is the 4th of short articles of my thoughts about Acquisition
of a business.

Credibility is a very important aspect of success in purchasing a company. Many of the issues important to establishment of credibility for one constituency may also apply to some of the other groups. Looked at altogether, the following issues are likely to help you to establish trustworthiness and believability in your proposed venture with the business community and the community at large:

1)    That you are serious enough about making the deal that you are devoting significant resources and effort to this venture. If you are a first time buyer, full-time dedication to this venture will contribute positively to your image.

2)    That you have reasonable qualifications for running the business, such as an M.B.A., appropriate work experience in a related industry and/or directly transferable management experience.

Continue reading Building credibility for business ownership