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Should I buy a company?

No need to reinvent the wheel... When you're thinking about retiring or taking over the family business, turn to us in time. Through Business Kemi, you'll get the key tips to start the sales process.

What if I buy an existing company?

There are many companies in Finland that need a successor to continue their operations. Finding such a company can be the initial push towards becoming an entrepreneur.

However, buying a company also involves risks, even though it offers a simple way for a new entrepreneur to start. Acquiring a company allows you to start business operations immediately, as customers and revenue are already in place. Some of the advantages of buying an existing company include:

- Continuing an existing business is less risky than starting a new one.
- You get an established customer base, reputation, and business model.
- You can leverage and develop an existing business.

Companies for sale are mediated by, for example:

When planning to buy

We are part of the Ownership Transfer Forum, which has compiled the typical aspects related to buying a company. Through us, you can receive coaching and free advice to start the process.

1

Benefits of Buying a Business

There are many good reasons to buy a company. For those starting a business, acquiring an existing company is a viable option. When the transaction is handled professionally, there are no surprises, and business operations begin immediately. The customer flow and billing continue uninterrupted. The money spent on buying a company could easily go towards marketing, purchases, and startup costs of a new company, with uncertain results. In fact, starting a new business is not significantly cheaper compared to buying an existing one, considering that the future of a new business is entirely uncertain, and all customers must be acquired from competitors. The business risk of a new company is, therefore, higher than continuing an existing one.

In addition to the customer base, as a buyer, you immediately gain valuable information about competitors, purchasing, advertising, customers, etc., through the acquisition. At the same time, many intermediate steps are eliminated, making the start-up process quite easy and quick. A professional broker can help with business planning and development ideas, and often the selling entrepreneurs are willing to assist in many matters to ensure the new entrepreneur's success. A business acquisition is successful when all parties are satisfied with it even years later.

2

Factors Influencing Business Acquisitions

Business acquisitions are often multi-stage and multi-layered processes where expert assistance benefits both the seller and the buyer. Unlike real estate transactions, business acquisitions involve factors that are often subjective, such as tax planning, payment methods, transaction practices, or even future projections. Only a few factors influencing business acquisitions can be measured or defined unambiguously. Companies might contain unknown risks at the time of sale, which the buyer can mitigate through well-drafted contracts. The broker's job is to make the transaction transparent and honest.

From the broker's perspective, the satisfaction of the buyer, seller, and financier is equally important. Today's buyer is tomorrow's seller. Without financiers, deals don't happen, and a satisfied seller is the best reference among those considering selling. To minimize the risks in business acquisitions, the brokers of Suomen Yrityskaupat (Finnish Business Sales) leverage the expertise of the entire brokerage organization when necessary. This ensures that neither the buyer nor the seller has unanswered questions when the deal is finalized, making the transaction secure.

Practical, well-developed agreements suitable for business acquisitions and thorough preliminary work also ensure transaction security. Did you know that a significant part of the broker's fee comes from familiarizing with, analyzing, and preparing the business for sale? This work is done specifically to protect the buyer.

A professional business broker guarantees mutual reliability in the transaction. The broker is involved from planning the exit strategy, setting the price, tax planning, arranging transaction financing, to business development. For example, the price is set so that the entrepreneur continuing the business can reasonably afford it.

The broker's valuation is always based on a situation where the business acquisition is genuinely possible. If no deal is made, the broker cannot sustain their livelihood, especially when the business valuation is unrealistic. Therefore, the broker must strive for realistic valuations. The commission-based brokerage fee motivates the broker to find the best-suited buyer for the business.

The biggest risk for an entrepreneur is to buy a business without expert help, directly from another entrepreneur. These transactions often result in the most unpleasant after-effects. There are numerous aspects in business acquisitions that, if overlooked, can become stumbling blocks for the entire operation. The broker's role in the transaction is to refine the business to a state where both parties know what they are relinquishing and committing to. Additionally, the broker has a better insight into the business's price than sellers with sporadic transaction experience. The broker also keeps you away from fraudsters.

3

Searching for the Right Company

Small and medium-sized enterprises (SMEs) do not have market prices. Seemingly similar companies can have vastly different prices. The general rule is that the better the company's performance or the longer the payment term, the higher the price. Business acquisitions are often financed by combining bank loans, Finnvera loans, personal funds, and extended payment terms from the seller. A broker can assist with these matters as well. The right price is the one that facilitates the deal. Unfortunately, there's usually little room for negotiation on the price set by an expert broker, but it never hurts to try.

The most important thing is to find a company that suits your personal situation, goals, and financial capacity, and that you have the skills to manage. Choose a company that represents the starting point of your dreams, not the destination. Every entrepreneur creates their own story with the company. It is better to buy a company that you can grow with your abilities rather than one where you barely meet the current demands.

The most promising opportunities are found through discussions with a broker. However, the broker will not reveal everything about the company from the initial contact. In fact, brokers have dozens of companies for sale that are not publicly advertised. This may seem strange, but it is ultimately in the buyer's interest.

The broker's job is to identify serious buyers and match them with the most suitable companies through discussions. When the acquisition process is well underway, the buyer receives all the necessary information about the company: nothing is hidden. This level of detail is not needed in preliminary discussions held with dozens of buyers. From the perspective of the final buyer, it is not beneficial for the company's information to be widely disseminated to all interested parties. Confidentiality agreements and phased information disclosure are therefore in the buyer's best interest.

You can also leave a request with the broker for the type of company you are seeking. It's worth asking if such a company might be coming up for sale or is already in so-called silent sale. The broker is a professional whose expertise supports and safeguards your decision-making process. Discussions with the broker are always confidential, so open and honest communication is the best approach. The broker will also advise you on when a particular company is suitable for you and when it is not.

4

It's important to understand the reasons for the sale

Here's How to Proceed

New or Existing Business? Business Kemi's business developers can discuss this with you in a confidential and free consultation.

Check out buyer's guides from the Ownership Transfer Forum.

Explore options through Yrityspörssi and other marketplaces. You can also contact business brokers and let them know what kind of business you are looking for. Not all businesses are publicly listed for sale.

Conduct a detailed evaluation of interesting prospects with the help of an expert.

Negotiate with your financier well in advance about your possibilities. Financing a business acquisition is rarely straightforward. Ownership transfers typically involve bank loans, Finnvera loans and/or guarantees, the buyer's own funds or guarantees. Other solutions are also available, and expert assistance is available to help utilize these options.

Once the financing is secured and the decision to proceed with the purchase is made, the technical execution of the transaction takes place. Utilizing an expert for contract matters is specifically for your protection as the buyer.

Take over the new business and dive into the daily life of an entrepreneur.