Buy a Texas Business? Now is the time

If you’re looking to buy a Texas business, despite conventional wisdom, now is a great time. There are plenty of Plano-based companies that can be obtained at bargain prices right now because their owners are panicking due to the recession.

Many are overextended in their personal finances (mortgages, kids in college, luxury car leases, etc.). With a bad economy, they’re looking for a way to get their hands on some quick cash. Baby Boomers are really panicking because they’ve watched their retirement savings dwindle to a point where “retirement” may not be in the picture soon.

However, if you’re looking for a Plano business to invest in, don’t pay too much for it. Entrepreneurs tend to have a distorted sense of the value they’re bringing to the table when it comes time to sell. Ego gets in the way of accurately measuring fair value.

Pay for what an enterprise is worth to you, i.e. there must be a reasonable return on investment (ROI) when making projections on future income from a company rather than the inflated numbers a seller will pitch to you based on changes that you could make to the business after you buy it. Don’t pay twice for changes that you’ll have to make post-purchase – once to the seller who never made them and a second time when you incur the expenses to make them.

Remember to avoid deals that involve Plano companies that keep two sets of books. The seller in this type of situation will brag about using one set of numbers to pay federal income taxes and another set (the “real ones”) to base his asking selling price. This type of business is loaded with potential tax fraud liabilities and other exposure that you just don’t want. Even if the deal seems good based on the numbers, why take the risk? The seller, who was willing to risk jail while owning the company, isn’t going to be around to take the fall when his misconduct is uncovered by the Internal Revenue Service, a customer who received a defective product, etc.

Be sure to consult with your Plano business attorney and your accountant to minimize your risks before making a purchase.

About the Author

With an advanced international law degree from Georgetown University and more than 14 years of real world legal experience, Attorney Mike Young shows Texas entrepreneurs how to protect and grow their businesses.
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