What does WIWO stand for?
WIWO is a short for “walk in walk out”. Understanding a key business term like this is crucial when negotiating with a seller or a business broker.
What does WIWO mean?
It is commonly used by business brokers during the sale of a business where the buyer takes over the business (walk in) and the existing owner leaves (walk out).
Distinguishing what is included in the sale of the business you are interested in as well as its value can be very difficult as well as time consuming.
There are many other commonly used terms that are used by business brokers on their listings and it best to understand these terms prior to negotiating.
Typical businesses sold as WIWO
Businesses that are sold as WIWO business are either small cash businesses where revenues are predominantly earned in cash or service businesses where there is little inventory. If it is a small cash business and it comes with tax returns, there could be discrepancies between what is shown in the tax return and the actual figures.
The main benefit for a seller to sell their business as a WIWO business sale is to quickly sell it with as few conditions as possible. Walk in walk out business for sale typically have a sale price of less than $100,000 and have few conditions attached. A common condition attached when a WIWO business is being sold is obtaining landlord approval for an assignment of the lease.
Potential upside of buying a WIWO business
There could be a valid and urgent reason as to why the existing owner wants to pack up and leave such as illness, moving interstate, overseas, family issues or divorce. There are many other reasons why owners sell but it doesn’t hurt to understand the true motivation(s) driving the seller to part ways from their business. The seller might need money quick without having performing a proper stock take or valuation of equipment which can be complicated.
This potentially means you can buy a quality business with undervalued assets from a seller desperate for an exit. As a buyer, it is up to you to perform your due diligence to ensure you know what you are getting into.
Possible downsides of buying a WIWO business
A business with large quantities of stock or lots of equipment can be difficult to properly value. As a buyer, it is up to you determine whether there is value in buying the business.
Once the price is agreed upon by buyer and seller and contracts are finalised, the keys to the business change hands and the buyer takes over ownership. If you’re new to buying a business, it is a good idea to read our guide to buying a business understand the general process.
As stated earlier, WIWO businesses are generally sold with few conditions.
This means there is no trial period, subject to finance and therefore it means that buyers should make sure they are paying for the business and the risks accordingly. Signing a contract for sale without those conditions could result in you could potentially overpaying for an under-performing business or worse, paying for a loss making business.
Final thoughts on a buying a “walk in walk out” business
Not all WIWO businesses are bad and every business situation is different.
Understanding the implications of buying a WIWO business is important if you are interested in buying.
If you are interested in finding a business for sale in Australia, feel free to browse businesses listed on our website for sale.
As per usual, perform your due diligence prior to making any decisions and always seek professional advice if you’re not sure.