Buying a business in CA

November 14, 2023

by a searcher from Columbia University - Columbia Business School in New York, NY, USA

I'm looking at buying a business located in CA. The business has 13 employees (all W2) and has many reasons why it can be a fruitful acquisition.

I've heard from a few people about there resistance to buying in CA - taxes, regulations, market changes, etc. I would love to hear the community's opinions on this topic and connect with anyone who has had a good experience.

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Reply by an intermediary
from Arizona State University in Long Beach, CA, USA

I sell businesses mostly in California and have heard several strategic buyers and a few PE firms express concerns with investing in CA for all the reasons that you mentioned. However, many of them eventually end up buying here primarily due to the large market size. I had a buyer with a presense in 12 States on the East Coast say that they tried hard to stay away from CA, but eventually realized that if they want to be a strong national player, they can't disregard CA. It's important to look at the pros and the cons and evaluate the target opporutnity holistically without getting caught up in negative rhetoric that may or may not apply to you. Yes, there are real challenges in CA, but many savvy small business owners have figured out how to thrive in the State!

Reply by an investor
from University of Pennsylvania in Dallas, TX, USA

II run a company based in CA where we also manage the HR function for our clients most of which are based in CA as well. I'm happy to discuss employment law, HR and workers comp considerations. In short, if you like the company I certainly wouldn't let the fact that it's based in CA kill the deal. But I would be cognizant of any employer risk especially if it's a stock purchase. We (www.aspenhr.com) can provide HR diligence on your target company which would entail performing a high level HR audit.

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