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Business Acquisition Advice
Are you unsure if your potential business acquisition is an opportunity worth pursuing?
Do you know what entity you should acquire the business in and how to go about achieving this?
Sifting through information memorandums, deciphering purchase prices and drafting an Expression of Interest can feel overwhelming. If you’re struggling to make sense of the numbers and need clarity before moving forward, rest assured: our specialist Perth-based team of business accountants is here to help you perform a sanity check and guide you towards the right decision.
A Quick Reality Check for Business Buyers
Every prospective business owner knows that acquiring a business isn’t just about a favourable purchase price—it’s about ensuring the investment makes sense from every angle. Many prospective buyers face the challenge of determining, in just a few steps, whether the financials and underlying assumptions of a target business align with their strategic goals.
At this critical stage, you need a reliable “sanity check”.
We help you quickly evaluate whether the business is worth pursuing further by:
- Reviewing Key Financials: We look at the numbers provided, including revenue, profit margins and purchase price, to see if they stack up.
- Assessing the Offer: Our review identifies any red flags or opportunities before you commit to a more formal agreement.
- Setting the Stage for Negotiation: Once you’re convinced that the business is worth it, you’ll be better prepared to work with the seller on the Heads of Agreement or contract.
- Preparing for Entity Structuring: We provide specialist advice on the optimal entity structure to acquire the business—ensuring that you achieve the best outcomes in asset protection and tax minimisation, both now and in the future.
Read Key Points & Transcript
Business Purchase Sanity Check & Structuring Advice by Perth-based Accountants
video key points
- When purchasing a business, approach every piece of information provided by the seller with a healthy scepticism, acknowledging that they may present the business more favourably than it is.
- Scrutinise financial adjustments, such as add backs to the net profit, that may inflate the business’s profitability appearance.
- Verify claims about the seller’s involvement and hours spent in the business through impartial sources, rather than taking them at face value.
- Recognise the potential for your personal bias, especially when excitement or the fear of missing out (FOMO) might cloud your judgement, affecting the objective assessment of the business.
- Approach the process with enthusiasm but maintain a critical, sceptical mindset to avoid costly mistakes. For further guidance in navigating the complexities of buying a business and to avoid common pitfalls, we are here to assist.
Presented by: Mike Beer
video transcript
When you’re buying a business, someone else is selling a business. Be sceptical about everything they present.
The seller will likely try to spin almost everything favourably. For instance, when it comes to the business valuation, it’s possible they’ll include some add backs to the net profit figure to make the business seem more profitable that it really is. Consider those add backs very carefully.
They will always invariably say that they are working less hours in/on the business as well. Don’t just take their word for things, verify them, ideally from unbiased sources.
When considering unbiased sources, consider whether you are an unbiased source.
How could you not be an unbiased source?
Well, sometimes our emotions can impede our judgment.
Buying a business can be exhilarating and when you find something you think is right, you may just become a little bit biased when looking at the facts. You may spin things in a favourable light.
If you’ve ever been in the market to buy a home, you’ve probably experienced something like this before.
Ultimately, we want you to approach buying your business with enthusiasm, but don’t forget to be sceptical. Don’t get caught making bad decisions, due to the Fear Of Missing Out.
There are many other things to consider when buying a business, and to help you avoid making costly mistakes, we are here to help.
The Problem: Uncertainty in Business Acquisition
Imagine you’ve received an information memorandum for a potential acquisition. The figures seem promising, but there’s so much at stake. You’re not sure if the asking price is realistic, or if the numbers hide unforeseen risks. Without a proper check, you might miss critical details that could affect the long-term success of the investment.
The uncertainty can delay your decision-making process, cost you precious time and potentially lead you down a path that isn’t the right fit. You need a clear, objective and trustworthy evaluation—a quick “sanity check” to confirm whether it’s worth moving forward.
Our Solution: A Specialist Sanity Check & Heads of Agreement Guidance
At Munro’s, we understand that every business acquisition is unique. That’s why we offer a tailored Heads of Agreement service designed to give you immediate clarity.
How the Process Works
Step 1: The Initial Sanity Check
When you first receive an information memorandum, we help you determine whether the numbers add up. We assess:
- The purchase price relative to the business’s performance.
- Financial trends and potential red flags.
- Immediate feasibility from a profit, asset protection and tax perspective.
Step 2: Preliminary Entity Structuring Advice
Based on the initial review, where relevant, we advise on the best entity structure for your acquisition. This critical step is designed to:
- Safeguard Your Wealth: Ensure your personal and business assets remain protected.
- Minimise Tax Liability: Optimise your structure so you benefit from available tax concessions and minimise your overall tax burden.
Step 3: Moving to a Heads of Agreement
If the acquisition passes the sanity check, you’re ready to enter into a Heads of Agreement with the seller. This document outlines the key terms of the deal, setting the stage for detailed due diligence. Our service ensures that you have the necessary information and structural advice to negotiate confidently.
Step 4: Beyond the Heads of Agreement
Should the purchase proceed, you’ll then move into the due diligence phase. (For more information on due diligence, please see our dedicated Due Diligence page.) Our role is to ensure that, at every stage, your decisions are informed by a thorough understanding of both the numbers and the strategic implications of your acquisition.
Key Outcomes and Benefits
By engaging with our business purchase and structuring advice service, you can expect:
- Clarity and Confidence: Make informed decisions quickly, reducing the risk of costly mistakes.
- Optimised Structure: Benefit from specialist accounting advice on the best entity structure to safeguard your assets and reduce tax liabilities.
- Streamlined Process: Move smoothly from initial evaluation to formal negotiations with a clear understanding of the opportunity’s viability.
- Peace of Mind: Our client-first approach means you get transparent, no-nonsense advice. With over 100 5 star Google reviews praising our responsiveness and proactive service, you can trust that you’re in safe hands.
- Time and Cost Savings: Avoid unnecessary due diligence on opportunities that don’t meet your criteria, so you can focus on acquisitions that truly matter.
Frequently Asked Questions for Business Purchases
- What is a Heads of Agreement?
A Heads of Agreement is a preliminary document that outlines the main terms and conditions of a proposed business acquisition. It serves as a roadmap for further negotiations and due diligence before a formal contract is finalised. - How can a sanity check help me decide if a business is worth pursuing?
A sanity check provides an initial review of the key financials and strategic fit of a potential acquisition. By examining the numbers and purchase price early on, you can quickly determine if the opportunity merits further investment of time and resources. - Why is entity structuring important in a business acquisition?
The right entity structure not only protects your personal and business assets but also helps minimise tax liabilities. You need to know what entity you are buying the business in, including having it setup, before committing to the formal purchase contract. Our specialist advice ensures that your acquisition is set up to achieve the best outcomes both now and in the future. - Are your business acquisition services available Australia-wide?
While Munro’s is based in Perth, our business accounting and advisory services are available throughout WA and Australia. - Why should I choose Munro’s for my business acquisition process?
Munro’s has been helping business owners in Perth and WA for over 50 years. We pride ourselves on being true problem solvers that has earned us over 100 5‑star Google reviews. We’re here to ensure your acquisition journey is as clear and stress‑free as possible. - What is the price for your business purchase and structuring advice service?
Our pricing is tailored to the specific needs of each acquisition. Please refer to our pricing page for general guidelines, then contact us for a personalised quote based on your unique situation. - How can I get started with help for buying a business?
Simply book a free Get To Know Each Other meeting with us. During this initial meeting, we’ll discuss your acquisition goals and determine the best way forward.
Where To Begin & What Comes After
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Perth WA 6000