Buying a business can be an intimidating endeavor. There are lots of moving pieces, and the paperwork alone can seem endless.
One thing to begin planning early on in a business purchase is the transition period. The time when operations of the company move from the previous owner to you.
Buyers can overlook this part of a company acquisition, or assume it will happen on its own. This is a mistake.
Having a plan in place helps the company continue operating while changing ownership.
Here are a couple of suggestions to help a transition go smoothly:
Create a plan early on
Before you even make an offer on a business, talk to the owner(s) about the transition plan. Make sure both parties agree on the best way to move forward.
You want to make sure everyone is on the same page. Previous owners and those assisting with the transition all need to have the same endpoint in mind.
By creating a plan that maps the entire purchase and agreeing to it before beginning the process, you reduce the risk of misunderstandings or missed details derailing the sale.
Don’t overlook the details
Be as specific as possible when discussing the transition plan. Have a timeframe in place, to the day if possible. Develop goals and share them with the current owners.
The more detailed your plan is, the better. It helps everyone understand their roles, and creates a roadmap for all parties to follow.
Thoroughly planning for the transition helps eliminate surprises, and paves the way for a smooth operation when you take over.
Value the previous owners
The previous owners are a wealth of information about your new purchase. Take full advantage of their knowledge. Ask as many questions as they’re willing to answer.
Attempt to work a continuing relationship with the previous owners into the transition plan.
How much advice are they willing to offer? How long after the sale can you call them with questions? Will they be reachable after the sale is finalized?
These are all questions to consider before purchasing the business.
If the owners will be unreachable, find help from managers or employees. The more resources you have, the better prepared you will be.
Buying your first business can be frightening. By nailing down the details and considering all aspects of a sale, you can feel prepared for this purchase.
If you are considering purchasing a business, an experienced business attorney can help you throughout the entire process and make sure you are comfortable in all aspects of the sale.
