Buying a Business vs. starting up
First of all, buying a company is usually much better than just starting up from scratch. It’s easier, more predictable and can increase your chances of success, for the simple reason that there’s already an existing track record that you can draw insights from.
More than that, the time is right for buying businesses. The Baby-Boomer generation (people born between the early 1940s to 1960s) are reaching retirement age. After the 2nd World War, a lot of new owner-managed businesses have been established. In many of these cases, the owner’s children have chosen to pursue another path rather than managing their parents’ business, which is why at this time many of these owners are looking to sell.
There are a few types of businesses that are very sought after, due to these very qualities:
High Asset Value Businesses
A high asset value business will have a lot of value in terms of stock and equipment. You can generally purchase a bigger business with less money if you were to take a loan against the assets of the business. Think around 75% of the NET asset value. Also, if the business is not going as well as you would have hoped, this is usually a more secure investment due to the fact that you can sell the assets and get a big portion of your money back. We’re strong supporters of businesses in sectors like Manufacturing & Engineering and have helped many clients acquire these types of businesses in the past.