THE BUYING PROCESS
If you are new to business ownership there are many factors to be considered. Buying a business is a serious undertaking not to be taken lightly or without professional assistance. It involves a series of events that, completed in the proper order, will result in a successful business acquisition.
Establish Criteria & Qualifications-When you meet or talk with one of our professional business intermediaries, be prepared to discuss your background, work experience and financial ability to buy a
business so that he or she can help you find a business that meets your needs.
Based on your qualifications and financial criteria, we will review businesses with you that align with your stated interests and financial goals. This may include businesses listed by the many other brokers that we have learned to respect and trust and with whom we have reciprocal agreements. After signing a Confidentiality Agreement, profiles that provide a summary of the business and financial information will be provided. We will answer or find the answer to any questions you may have about the business for sale.
Meet the Owner & Visit the Business- A business can look right on paper but before making an offer you need to actually see the business, meet the current owner and make sure it “feels right.” Confidentiality of the transaction, and even the fact that the business is for sale, is of primary concern to the owner. Any visit to the business must be by appointment and coordinated with the broker and owner and will usually take place when employees and customers are not present.
This is an excellent opportunity to learn how the business is managed, how it operates and what it requires on a daily basis. Ask yourself what you could do to improve the business. Usually you will know after the first visit if you can see yourself owning and running the business. If it feels right, it probably will be a good business for you. If it doesn’t, then we should keep looking for the one that does.
Making the Offer- You should now be ready to begin the process of making an offer and entering into the due diligence period. We can assist in the writing of an Offer to Purchase Contract that can be presented to the seller. In doing so you will want to include various contingencies that will protect you if you discover discrepencies that alter your opinion of the value of the business. Contingencies for factors such as landlord approval of the lease transfer, financing and franchise requirements are out of yours or the seller’s control and must be addressed as well. Your goal here is to make the offer safe for you in case any problems or discrepancies are found.
Expect a counteroffer from the seller. It might be a major consideration such as purchase price or terms, or it could be a small detail about training or clarification of a point. We will assist in negotiations with the goal of reaching an agreement acceptable to both parties.
Due Diligence- Upon the seller’s acceptance of the offer you will enter into a due diligence period where you will be given an opportunity to examine the business as thoroughly as you desire. During the due diligence period, your broker will coordinate your request for documents and assist in arranging meetings with related parties to the transaction including seller's professional advisors, the landlord, lenders and others as needed. The confidentiality of the transaction must remain intact during this period. If institutional financing is required, we can usually recommend various lending sources depending upon the type of financing needed. Contingencies will be released by you as you are satisfied with them.
Closing on the Transaction- When all contingencies have been met and released it is time to start the closing process. The closing process must be handled by a competent attorney familiar with business sale and acquisition statutes and other technical requirements. The preferred method is to engage a neutral closing attorney who will prepare all the necessary legal documents, perform lien and title searches as appropriate, and make sure all necessary escrow and filing requirements are properly handled. The costs are shared equally by the buyer and seller. You and the seller are encouraged to have your respective attorneys review these documents prior to the closing.
Congratulations!
You’re now a business owner!
