What is a goodwill?

A business is a group of tangible and intangible assets that form an economic unit intended for a commercial activity. In the legal sense, a business is an "intangible asset". The owner of a business may not own the premises in which it operates, in which case it is a tenant.

 

What is a business composed of?

              Intangible assets

The goodwill includes goods that cannot be touched, but which nevertheless have a real market value, for example

    ° The clientele: this is possibly the most important aspect of the sale of goodwill. A buyer of a business will be able to benefit from the experience of the seller and also from the clientele that he has developed over the years! Thus, a buyer will start his activity with an acquired clientele that he will also be able to develop.

    ° The lease: in fact, the lease is transferred at the same time as the business, because the latter is closely linked to the clientele and therefore to the location of the business.

    ° The licenses and administrative authorizations: for certain businesses, it is necessary to obtain a liquor license (e.g. License IV), which can be difficult to obtain.

 

              Tangible assets

The tangible assets concern all the tools and furniture necessary for the operation of the business. The transfer will include tools, merchandise, vehicles or even the equipment and machinery necessary for the proper functioning of the business.

 

The advantages and disadvantages of a business acquisition

The advantages are multiple, the existing clientele of the business will allow the buyer to settle more quickly. However, the purchase of a business is a real investment and requires a substantial budget.

 

The different guarantees to be included in the deed of sale

There are several steps before you can finally obtain your business. The most important step is obviously the deed of sale which must include certain obligatory mentions:

    ° The origin of ownership of the business: if the seller has bought the business himself, he must mention this, including the identity of the previous seller.

    ° A list of all the registrations encumbering the business: this means that the seller must inform the purchaser if the business is encumbered by a pledge, a release must be requested by the seller.

    ° The turnover and operating result of the last three financial years:

    ° The selling price:

    ° The lease characteristics: the deed of sale must mention the conditions of the lease such as the name and address of the lessor, the date of conclusion of the lease and its duration.

In the deed of sale, certain guarantees must be included to protect the buyer, in particular a guarantee against hidden defects and a guarantee of eviction which protects the buyer from any attempt by the seller to disturb the peaceful enjoyment of the property acquired. This guarantee is often materialized by a non-re-establishment clause which means that the seller or any other person related to the previous operation cannot settle in the vicinity of the sold business.

 

Financing the project

    Personal funds

In order to finance the purchase, it will obviously be necessary to invest part of one's savings in the project. In general, a contribution of at least 30% of the total amount of the business is required. It will be easier to find investors, such as a banking institution, if you invest your own money.

 

    The business loan

The purpose of the financing

The business loan is obviously the appropriate solution for any business financing. This loan will be obtained from a traditional banking institution and will be for a period of 7 to 15 years maximum. The bank, before granting you this loan, will study your situation and your business plan.

Guarantees requested by the banking organizations

The banks necessarily need certain guarantees in order to secure their investment. The first and most classic one is a borrower's insurance which will cover the risks of death and permanent disability of the loan. Secondly, the bank generally requires a guarantee or a pledge of assets to ensure the repayment of the loan even in case of financial difficulties of the company.

The purchase of a business marks the beginning of a new professional life, it is necessary to be advised throughout this operation, contact us for more information !

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