Buying a Business

Buying a Business gives accounting firms a structured framework for helping SME clients investigate a proposed business acquisition before making a significant financial commitment.

The package includes 24 core documents and presentation resources covering client preparation, preliminary financial assessment, due diligence, business and share acquisitions, market and location research, Business Planning, Budgets & Cashflow Forecasts, finance preparation and management of the professional engagement.

It also includes a Buying a Business Consultancy reference index connecting advisers with 60 supporting ESS BIZTOOLS papers across the wider financial, commercial, taxation, risk, valuation and business-management issues that can arise when purchasing and operating an SME.

A Structured Buying a Business Consultancy

The Buying a Business Procedure Control Form provides an overall framework for managing the acquisition advisory engagement.

It supports your firm across the major stages of the process, including:

• Initial discussions with the purchaser
• Engagement scoping and quotation
• Pre-purchase information gathering
• Preliminary financial assessment
• Due diligence
• Reporting findings to the client
• Business Planning and financial forecasting where the purchase proceeds
• Finance preparation
• Post-acquisition business advisory opportunities

This gives your firm a repeatable professional framework rather than approaching each proposed acquisition as an isolated review of historical financial statements.

Prepare the Client Before They Commit

The package includes client-facing resources designed to help prospective purchasers think more carefully about the business they are considering buying.

These resources can support early discussions around:

• The client's objectives
• The type of business being considered
• The client's experience and expectations
• The information available from the vendor
• The commercial issues requiring investigation
• The financial commitment involved

This helps create a more disciplined starting point before significant time or money is committed to the transaction.

Purchasing a Business Checklist

A detailed Purchasing a Business Checklist provides a structured framework for identifying the areas a prospective purchaser may need to investigate.

The checklist covers the wider business rather than concentrating solely on accounting figures, helping your firm raise relevant financial, commercial, operational and transaction issues with the client.

Preliminary Financial Assessment

The package includes a Preliminary Financial Analysis Report resource that can be used before the client commits to a more extensive due-diligence assignment.

The purpose of this stage is to help the purchaser form an initial view of:

• Historical financial performance
• Underlying profitability
• Future maintainable earnings
• The total investment associated with the acquisition
• The financial return the purchaser expects to achieve

This can help identify whether the economics of the proposed purchase justify progressing to a more detailed investigation.

Consider the Complete Investment

The purchase price is only one component of the financial commitment involved in acquiring a business.

The Buying a Business resources help your firm encourage clients to consider the broader investment required to acquire and operate the business, including the working capital and other financial requirements that may accompany the transaction.

Assess Future Maintainable Profit

The financial-analysis resources help the adviser look beyond the reported accounting result and consider the earnings that may reasonably be available to the purchaser in the future.

This provides a stronger basis for discussing whether the proposed acquisition can produce an appropriate financial return for the client.

A Decision Point Before Detailed Due Diligence

One of the practical strengths of the framework is the ability to conduct an initial financial assessment before progressing automatically into a larger due-diligence assignment.

If significant concerns arise at this stage, the client can reconsider the opportunity before committing further professional fees and resources.

Due Diligence for a Business or Asset Purchase

The package includes a comprehensive Non-Company Due Diligence Review for situations where the client is purchasing a business or selected business assets rather than shares in the existing corporate entity.

The review provides a structured framework for examining major areas such as:

• Ownership and management
• Financial and accounting information
• Employees
• Business premises
• Assets
• Customers and suppliers
• Contracts and commercial arrangements
• Intellectual property
• Stock and Work in Progress
• Business systems and controls
• Risk-management issues

This helps your firm investigate the wider business rather than relying only on information presented by the vendor.

Separate Resources for Buying Shares in a Company

Purchasing shares in an existing company can create different risks from purchasing selected business assets.

The package therefore includes separate Buying Shares in a Company material and a dedicated Due Diligence Review Form for company-share acquisitions.

These resources support consideration of the existing legal entity, its history, assets, liabilities, commitments, taxation position, governance arrangements and other company-specific matters that may become relevant to the purchaser.

Investigate Commercial Relationships

A business acquisition can depend heavily on relationships that existed under the previous owner.

The due-diligence resources help advisers raise questions around areas such as:

• Important customers
• Key suppliers
• Employees
• Leases
• Commercial agreements
• Distribution and referral arrangements

This can help the purchaser consider whether important operating assumptions are likely to remain valid after ownership changes.

Market and Location Research

The package includes resources for undertaking additional market and location research where these factors are important to the proposed acquisition.

This includes guidance on the use of Australian Bureau of Statistics information and other sources that may assist when investigating issues such as:

• Market characteristics
• Population and demographics
• Business location
• Potential customer base
• Other site-specific commercial considerations

60-Paper Business Acquisition Reference Index

The Buying a Business Consultancy reference index connects advisers with 60 supporting ESS BIZTOOLS papers covering a broad range of topics that may become relevant during an acquisition.

Reference areas include:

• Business structures
• Financial management
• Budgets and cashflow
• Marketing
• Industry-specific business issues
• Business systems
• Human resources
• Taxation
• Risk management
• PPSR considerations
• Business valuation
• Working capital
• Other operational and commercial matters

This gives your firm a wider reference library that can be used selectively according to the type of business and issues identified during the investigation.

Report the Findings to the Client

A dedicated Report on the Investigation into the Targeted Company or Business provides a framework for communicating the outcome of the investigation.

This gives the purchaser a structured opportunity to consider the financial and commercial findings before making the final decision about whether to proceed.

Move into Business Planning if the Purchase Proceeds

If the acquisition remains attractive following due diligence, the package connects the investigation with planning for the future operation of the business.

Supporting Business Planning resources help your firm work with the purchaser to consider:

• Business objectives
• Future operating assumptions
• Customers and markets
• Management priorities
• Business improvement
• Financial requirements

This helps move the engagement from “Should I buy this business?” towards “How will I operate and develop this business after I acquire it?”

Budgets & Cashflow Forecasts

The Buying a Business framework also connects the proposed acquisition with forward-looking financial forecasts.

Budgets and cashflow forecasts can help the purchaser assess whether the proposed business is capable of supporting its future operating requirements, funding commitments and financial objectives.

This can also identify where more detailed Budgets & Cashflow Forecasting work should be undertaken as a separate advisory assignment.

Prepare for Finance Discussions

A Template Finance Application is included to help organise the financial and business information that may be required when the purchaser seeks funding for the acquisition.

The resource provides a framework for bringing together areas such as:

• The proposed acquisition
• The applicant and business
• Financial performance
• Funding requirements
• Security and repayment considerations
• Business Planning
• Financial forecasts

This can help your firm support more organised discussions between the purchaser and their financier.

Scope, Quote and Manage the Consultancy

The package includes dedicated engagement-management resources to help your firm deliver Buying a Business as a professional advisory service.

These include resources for:

• Work programming
• Budgeting and quotation
• Engagement timetables
• Client proposals
• Due-diligence appointments
• Assignment management and control

This helps establish clear responsibilities and commercial arrangements as the engagement progresses through its different stages.

Different Stages Can Be Separately Scoped

A prospective purchaser may not require every part of the consultancy immediately.

The framework allows the engagement to develop progressively — from initial discussions and preliminary financial assessment through to detailed due diligence, planning, forecasting and finance support where appropriate.

This gives your firm greater flexibility to match the scope of work with the client's circumstances and the stage reached in the proposed acquisition.

Coordinate Specialist Advice

Buying a business can involve significant taxation, legal, employment, finance, property and other specialist issues.

Your firm can use the resources to identify matters requiring attention and coordinate appropriately qualified advisers where specialist advice is required.

Legal agreements, transaction structures, taxation consequences and other regulated matters should always be considered using current professional advice relevant to the individual acquisition.

Identify Post-Acquisition Advisory Opportunities

The advisory relationship does not necessarily end when the purchase is completed.

The investigation may identify further work involving:

• Accounting systems
• Internal controls
• Business systems and procedures
• Management reporting
• Budgets and Cashflow Forecasts
• Working-capital management
• Business Planning
• Management processes
• Ongoing financial and business advisory support

A Repeatable Acquisition Advisory Service

Together, the 24 core Buying a Business resources and supporting 60-paper reference index give your firm a comprehensive framework for helping SME clients investigate proposed acquisitions more carefully.

Your firm can help the purchaser understand the opportunity, conduct an initial financial assessment, undertake appropriate due diligence, identify commercial risks, report the findings and then support Business Planning, financial forecasting and funding preparation if the acquisition proceeds.

This creates a substantial business advisory opportunity around one of the most important financial decisions an SME client may make, while providing your firm with a structured and repeatable process for managing the engagement.