Pre-Purchase Reviews: what are they?

So, what actually is a Pre-purchase Review?

Just like getting a building inspection before you buy a property, you need a Pre-purchase Review before you buy a business.

In the same way as looking for termites, the Pre-purchase Review looks at the financial aspects of the business to see if there is trouble ahead.

It’s a big decision to buy a business, particularly from a financial perspective. And it’s more than just the up-front costs that need to be considered. There are the ongoing costs that need to be factored in as well.

Also the hidden costs and those expenses you were hoping you wouldn’t have to pay (!)

The Pre-purchase Review starts with the expenses. That’s important because you need to know what the business will be spending money on. Even if it’s a ‘greenfield site’, we can work out fairly accurate estimates of what your operating costs will be.

The Pre-Purchase Review will:

  • Determine the level of sales you need to cover your costs and provide the income you’re after,

  • Provide an estimate of the costs to run the business in its first year of operation,

  • Include questions to consider as part of your ‘Due Diligence’.

It really is an essential part of your evaluation of the business you are looking to buy.

Let us know if you need a hand

Peter & Kate

#franchise #smallbusiness