You may be looking at buying a business for the first time, or acquiring an existing business as an investment or addition to your current operations:
- What will you look for to ensure success?
- How will you know if you are being ‘sold’ an idea or a hardworking asset?
The following checklist will help you with your search and research process.
Is the industry / market is growing
|
Definitely at a good rate |
At a steady rate |
Slowly |
Marginally / not really |
No – it’s contracting |
Degree of concern (H, M, L) |
How many years profitable trading does the business have?
|
>10 |
6 to 10 |
3 to 5 |
1 to 2 |
<1 |
Degree of concern (H, M, L) |
What opportunities for business growth exist (existing markets, new markets, new products / services and geographical locations)?
|
Excellent |
Good |
Fairly good |
Ok |
Poor |
Degree of concern (H, M, L) |
Ability of the business to control its operating costs
|
Excellent |
Good |
Fairly good |
Ok |
Poor |
Degree of concern (H, M, L) |
The market can sustain the current level of competition
|
Definitely |
Probably |
Possibly |
Unlikely |
No – competitors are reducing and / or merging |
Degree of concern (H, M, L) |
Top 10 customers % of total income
|
<10% |
10-20% |
21-30% |
31to40% |
>40% |
Degree of concern (H, M, L) |
Last five years number of legal claims
|
0 |
1 |
2 or 3 |
4 or 5 |
>5 |
Degree of concern (H, M, L) |
How many times in the last 12 months has poor supply negatively affected the business?
|
0 |
1 |
2 or 3 |
4 or 5 |
>5 |
Degree of concern (H, M, L) |
Existence and use of best practice operating systems
|
Yes |
Moderately |
In between |
To a small degree |
Not at all |
Degree of concern (H, M, L) |
Degree of principal / owner reliance
|
None |
Low |
Medium |
High |
Very high |
Degree of concern (H, M, L) |
Key staff experience and knowledge
|
Excellent |
Good |
Fairly good |
Ok |
Poor |
Degree of concern (H, M, L) |
Source: Extract from Archer Gowland’s Risk and Value Driver Assessment. Full analysis includes 50 questions and recommendations based on findings.
You will also want to look at the business’s track record of profit margin and growth and how costs are controlled.
More information
For a thorough due diligence on your prospective business, please contact Ian Walker from Archer Gowland on 07 3002 2699. We will analyse your new venture and identify any areas for concern and growth opportunities to give you all the information you need to make an informed and wise decision.
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