Buying a business? Use this 25-point checklist to evaluate financing, cash flow, employees, valuation, due diligence, leases and acquisition risk.
This should become the ultimate pillar page for the entire series.
Before You Search
1. Determine Your Budget
Know what you can comfortably invest.
2. Know Your Skills
What do you bring to the table?
3. Choose Your Geography
Tampa? Clearwater? Lakeland? Orlando? Anywhere in Florida?
4. Identify Your Industries
Know what you’re willing—and unwilling—to operate.
5. Determine Your Financing
Understand your borrowing capacity before you start shopping.
Finding the Business
6. Work With a Broker
A broker can help you identify opportunities.
7. Search the Marketplaces
Don’t rely on one website.
8. Network
Some businesses aren’t publicly advertised.
9. Screen Opportunities
Don’t waste time on businesses that don’t meet your criteria.
10. Sign Confidentiality Agreements
Serious buyers respect confidentiality.
Evaluating the Business
11. Review Financials
Understand revenue and cash flow.
12. Analyze SDE
Determine what the owner actually receives.
13. Analyze Customers
Look for concentration and retention risk.
14. Analyze Employees
Understand who actually operates the business.
15. Analyze Owner Dependence
Could the seller disappear tomorrow?
Valuation
16. Determine Market Value
Use appropriate transaction data and valuation methodology.
17. Identify the Multiple
Understand why that multiple applies.
18. Find the Dents
Look for fixable weaknesses.
19. Determine Your Upside
What can you realistically improve?
20. Know Your Walk-Away Price
Don’t negotiate against yourself.
Due Diligence
21. Verify the Financials
Follow the money.
22. Review Contracts
Understand what transfers.
23. Review the Lease
Especially for location-dependent businesses.
24. Investigate Liabilities
Know what you’re taking on.
25. Make Sure the Deal Works
At the end of the day, the business has to support the price and the financing.
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 476 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential. He is also a Florida Licensed Real Estate Broker and Business Brokers of Florida Board Certified Intermediary . Shea is a member of the VRMA and a recognized expert in property management and vacation rental management business sales