When to buy a business

There are more buyers of businesses than good businesses to purchase. In a recession that seems somewhat suprising. Consider the number of people who have been laid off from their jobs and the number of buy-outs by corporate America of jobs to entice people to take early retirement in a lump-sum buy-out. This results is a large pool of potential business owners. Why are good businesses difficult to find?

A recession impacts the bottom line of many businesses therefore the owner of that business doesn't want to sell when their bottom line doesn't look so good. The smaller the bottom line the less value exists for the business.

It behooves a potential buyer to use some creative thinking to entice owner's of good businesses who are experiencing a downturn due to the economy to sell. It makes sense to learn from the business owner their needs and their goals. Can something be structured to meet those needs and goals. Remember it is not necessarily the price for a business that is important so much as the amount the seller can actually realize from the sale. Some creative tax planning could result in a larger value realized by the buyer as could a longer payout with increases based on an economic index. The buyer might assume obligations of the seller rather than an actual cash outlay at closing. The buyer could create a joint venture arrangement leaving the seller as a part owner providing provisions for buyouts based on the business meeting certain sales targets at values tied to sales in years prior to the recession.

So there are ways to create a win-win situation without having to wait two to five years for the economy to fully recover. A business owner should not become a slave to their business because of a national/world economic meltdown. If it is a good business which has shown it's viability in good economic times then create a mechanism to reward the owner and allow the buyer to begin building for the future with an existing platform and base for a profitable future.

Are there risks to such an arrangement? Sure! Owning a business has risks, but also there are rewards. You work to create a situation where the risks are mimimized. Creative thinking is the key along with the overall concept of establishing a win/win situation.