How to Buy a Business at Auction

When a business needs to be sold quickly, it can be sold at auction. This usually provides buyers with the opportunity to buy a business for a lower price than its appraised value. Like any major purchase, though, buying a business should not be taken lightly.

Instructions

Difficulty: Easy

1. Look for auction houses that sell businesses if you don't already have a business in mind. If you already know the business you want to buy, look into the terms that the auctioneer uses in its sales. They should provide plenty of time to research the business.
2. Talk to an accountant. When buying a business straight from the business owner, the buyer generally needs to have an accountant and possibly a lawyer look through the books to determine how much the business earns and what it's worth. If you are buying it at auction, you should still have an opportunity to find out what the business earns. If the auction is online, ask for proof of income, including screen shots if necessary.
3. Make sure you are equipped to run the business once you own it. If it's a large business, you will need to have the resources to pay for employees. For a sole proprietorship, you will need to have the knowledge and skills necessary to keep the business running. Find out exactly what it will take to keep the business running.
4. Bid with a budget and a time frame in mind. Bid up to an amount you decide on in advance. It is too easy to get excited at an auction and bid more than something is actually worth. You should also know in advance when you will be taking over the business. This may be as soon as the auction is over, or there may be a transition period.