Buying a Business in Utah
Do you have questions or concerns about the process of buying a business in Utah? Howard Lewis & Petersen understand that finding a business to buy can be confusing. Here are some answers to common questions.
Why Buy a Business?
There are many advantages to finding a business to buy instead of starting one from scratch. An already up-and-running establishment already has profits coming in, has marketing and community reach, and is generally less risky than starting a business. However, there are some cons to it as well, and mainly you shouldn’t purchase a business that you know nothing about.
How To Buy a Business?
To buy a business in Utah, you are going to want to have an attorney and a certified accountant go over the value of the business and do due diligence. It is paramount to ensure that there is no fraud on the account statements and that the value of the business they state is indeed the value. Other aspects that will need to be gone over are the list of liabilities and sales records, financial statements and tax returns, customer patterns, advertising and marketing, location and market history, and the reputation of the business.
These things take time but will keep you from buying a business that has a trash reputation in a location that is going under traffic-wise. Business attorneys are there because they know what needs to be done, what red flags to look out for, and to keep your best interest at hand.
EBITA
So you’ve found a business, and it’s in a great location with wonderful foot traffic and is reputable. Great. Now you’re going to be introduced to EBITA, or Earnings Before Interest, Taxes, and Amortization.
What is this? This is what helps you set a price for the business you want to acquire.
Earnings before interest, taxes, and amortization gives you the value of earnings before all that is taken out, and it is the single biggest financial indicator used to value profitability. But why is it important?
- Easily lets you compare business to business in the same industry
- Measures an accurate view of the performance of the business over time
- EBITA takes out company debt interest, taxes due, and writing off intangible asset costs
- Reliable check of a business for their on-hand cash flow
- Indicates the efficiency of the business operations
If there is no mention of the EBITA metric on the paperwork, and there isn’t a requirement for that, you can go to the financial statements of the business. There will be earnings, tax, and interest in the statement. You can find the amortization figure in the cash flow statement or in the notes to the operating profit to calculate.
How Can Business Lawyers in Utah Help?
Provo attorneys will help you make sure you have the right paperwork in the purchase, such as a purchase and sale agreement. They’ll make sure there is due diligence and go over the contract to make sure you are covered. They’ll be there to go over bank statements and be a trusted adviser.
While there is a cost involved in getting an attorney, you may save hundreds of thousands of dollars by not being caught in a costly mistake. Having a business lawyer committed to your business buying is insurance that there is a knowledgeable source to ensure the best possible outcome.
Howard Lewis & Petersen are Provo lawyers that are here to help you buy a small business or help you in creating a solid basis for your business aspirations. From paperwork to consultations, give Howard Lewis & Petersen a call if you’re looking for Utah business.
