Buying A Business: Research the Permitting History

An earlier post referred to confirming permits and buying a building.  This is another post on the same subject. 

Bob House recently penned an article in INC. about selling a business.  The data is astounding.  He centers the piece on what drives business value and that over 50 percent of the U.S. businesses are owned by Baby Boomers who are getting along in years.

He also notes that the median asking price is not equal to the asking price.  However, the market continues to be brisk (please note that the sales data only goes to the 3^rd Q. of 2020).

One key point for a buyer to consider is the purchase of a closed business and the facility.  It is or could be an asset. The buyer might want purchase or lease the building due to the location.  It is often assumed that all the permits and licenses are in place. 

I suggest that you verify with your local building department that indeed all required permits were secured.  The main reason is should you want to or need to redo the interior you may find previous work in the building was done without a permit. Even worse is construction could have been completed, but not up to the building code.

So, to get your new interior work completed, the current tenant or owner must bring the facility into compliance.  That means you must pay for work done that you may not have wanted or needed. Or you will be required to bring up any construction not up to code into compliance. And you must secure the required permits. 

In summary, it pays to research the permitting and licensing of any existing facility you are evaluating for lease or ownership.

Link to article:  https://www.inc.com/bob-house/selling-a-business-during-a-pandemic-what-baby-boomers-can-learn-from-business-brokers.html?cid=search