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Chapter 5

MGT 3806 Chapter Notes - Chapter 5: Exaggeration, Franchising


Department
Management
Course Code
MGT 3806
Professor
M I K E M A D O R E
Chapter
5

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Chapter 5: Buying a business
PURCHASING AN EXISTING BUSINESS
Advantages of Purchasing
Reduction of Risk
Reduction of Start-up Time
Financing
Location
Establish Marketing Structure
Cost
Existing Employees
More Opportunity to Be Creative
Reduction of Competition
Disadvantages of Purchasing
Marginal Success Record
Physical Facilities
Personnel
Inventory
Accounts Receivable
Financial Condition
Market & Key Customers
Overvalued
Paying Too Much for Goodwill
SOURCES OF BUSINESSES FOR SALE
Internet
Government Departments
Trade Journals
Real Estate Brokers
Other Professionals
Word of Mouth
EVALUATING A BUSINESS FOR SALE
Industry Analysis
Sales and Profit Trends in the Industry
The Previous Owner
Financial Condition of the Business
Validity of the Financial Statements
Evaluation of the Financial Statements
Condition of the Assets
Liquid Assets (Cash and Investments)
Accounts Receivable (HOW OLD)
Inventory
Building and Equipment
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