Investing in a company? What to look for.

There are a considerable number of companies for sale so if you looking to invest it should be easy right? But there are a number of important factors that should be looked at when thinking of investing.

Important factors to consider when looking at investing in an ongoing company is how the company is managed and manages its money, the companies track record is another point to look for, does it have a solid steady growth, or has it just had a good year?

Other points to consider:

• Leadership
• Risk vs Reward
• Business cost

Questions to ask yourself before investing?

• Am I ok with the risk level?
• Do I understand the investment?
• Should I get financial advice?
• Can I get my money out

You need to assess the assets and liabilities

• Does the business have full ownership of its assets?
• Is the intellectual property protected and registered?
• Are there contracts in place with buyers and suppliers?
• Does the sale include the transfer of some or all of the employees?

To value the business, you will need the full years financials or at least the latest management accounts. Ensure you are talking to the person that legally has the right to sell the business, confirm this by going onto companies house.

In conclusion

I believe that when buying a business one should spend time in getting to know the business well before making an official offer, and you can do this by doing a thorough due diligence where you will identify the risks and see what it will cost to get it back on track.

If you are considering investing in a business, speak with a reputable business broker, such as Commercial Road. Our advisors can help you find the right business for you and guide you through the buying process, ensuring you carry out your due diligence before going ahead.