Mistake #9 - Allowing Counselors Making Buying Decision

Something changed in your life and you decided to own a business. You could probably start from scratch, but considering all pros and cons decided to acquire an established business. Well, it's a very wise decision as long as you do it right. Unfortunately, new business buyers make many mistakes that make business acquisition much harder, some times causing substantial financial and emotional hardship, other times loss of otherwise promising business opportunity altogether.

Let's review 10 major mistakes that business buyers make that prevent them from successfully buying a business.

• Mistake #1 - Procrastination 
• Mistake #2 - Making Assumptions 
• Mistake #3 - Not Asking Right Questions 
• Mistake #4 - Being Overly Aggressive 
• Mistake #5 - Falling In Love With A Business 
• Mistake #6 - Not Being Able To Compare Businesses 
• Mistake #7 - Not Using Intermediary For Negotiation 
• Mistake #8 - Forming Partnership Without Proper Documentation 
• Mistake #9 - Allowing Counselors Making Buying Decision
• Mistake #10 - Relying Too Much On Financial Documentation

Mistake #9 - Allowing Counselors Making Buying Decision

It is very helpful to get professional counseling while buying a business, even more so if you don't have much experience in buying businesses. It is a very good idea to engage accountant for checking out the financials, especially when acquired company has complex financial structure and documentation is hard to understand. Accountant is also important for understanding tax implications of business acquisition, and how purchase price should be allocated to your advantage.

Business purchase agreement, unless you're buying a small business under $1 million, should be reviewed by an experienced business attorney. If you don't feel comfortable going with standard agreement provided by the business broker, consider hiring an attorney even for smaller purchases. I want to emphasize that using help of professional counselors is quite important unless you've done several acquisitions before and quite fluent in business acquisition process and documentation.

However, it's also worth mentioning that quite often business buyers delegate business buying decision to professional counselors too. This is a very big mistake. You should never ask you accountant or attorney "So, should I buy this business, what do you think?" Responsibilities of professional counselors should be limited to performing specific task: reviewing financial statements and drafting the puchase agreement. Business buyer personally should review their work results and make his or her own buying decision.

Why can't you rely on counselor's advise? Because most likely they will advise you against the purchase. They gain absolutely nothing from you buying a business, however may lose professional credibility or even get sued in case you lose money acting on their advise. Besides, buying a business in indefinitely more than just buying cash flow or agreement terms. It also has considerable personal appeal to a new owner and becomes an instrument for realizing buyer's dreams and ambitions. Can advisers evaluate something like that? I guess, not...