Getting Started: Questions And More Questions
Finding a business opportunity usually starts with researching local newspapers,
placing telephone calls or visiting web sites like the one we host. The
prospective Buyer may be a Corporation, Private Investment Group or a sophisticated
Private Investor who has a very definite idea of the type of business wanted.
On the other hand, many first time buyers are still in the formative or
exploratory stage of their search. Frequently that Buyer's first question
is, "What kinds of businesses do you have?".
Although we have many business listings, that question
can only be answered properly when we have some idea of the prospective
Buyer's resources, skills and needs. For example, if we just listed Ford
Motor Company and the prospective Buyer has several billion dollars in
available funds and a background in automobile manufacturing, that would
be a match made in heaven. But that perfect match would never have occurred
unless we ascertained pertinent information regarding the prospective Buyer's
background, resources and objectives in advance.
The first and most important step is for the Business
Broker to learn about the prospective Buyer. When we ask, "How many
days per week are you comfortable working?", “Are you planning
to work alone or hire employees?" or "How much cash do you have
for a down payment?", along with other questions, we are gathering
the information necessary to match the prospective Buyer to an appropriate
business opportunity. We are also narrowing the search and saving the prospective
Buyer time and aggravation.
Defining The Business Opportunity Search
After the search has been refined to businesses
which fit the prospective Buyer's criteria and requirements, we can communicate
non confidential summaries of our business listings to the prospective
Buyer in a number of ways. One way is for the prospective Buyer to view
our web site and access the non-confidential summaries of our business
listings by simply clicking on the "Businesses for Sale"
button. This section will provide our business opportunities lists, a
description of each business, financial details and the asking prices.
Focusing On The Right Business Opportunities
During the search, the prospective Buyer will
receive multiple lists of interesting business opportunities. At this
stage the business opportunity search moves to a new level involving
the necessary disclosure of confidential information relevant to the
purchase or sale of any business.
The new level is one of mutual trust and obligation
between the prospective Buyer, our company and the Seller(s) of the business(es)
of interest.
When buying a business, confidentiality protects the
prospective Buyer from having anyone such as an employer, employees, or
the competition discover the proposed acquisition prematurely. It
also protects the Seller against unnecessary problems with customers, employees,
vendors, competitors, landlords, bankers, creditors, etc.
As a result, all prospective Buyers are required to sign a Non-Disclosure
and Confidentiality Agreement before receiving sensitive confidential
information.
The Business Profile: The Facts
An important element in the purchase process is
the business profile. This report on the business offered for sale is written
to provide information that the prospective Buyer can review and evaluate
in determining the suitability and desirability of the business opportunity.
A typical Business Profile contains a detailed description of the business,
a summary of financial data and additional business facts such as lease
information, number of employees, inventories, pending and operative contracts
with vendors and customers and other pertinent information. Following a
thorough review of the Business Profile and consultations with the Business
Broker, the prospective Buyer will have a solid understanding of the business,
its operations and potential for continued future success.
Face to Face Meeting
After reviewing the Business Profile, financial
data of the business and the business premises, if the prospective Buyer
determines that the business presents a desirable opportunity, the prospective
Buyer should be prepared to make a purchase offer. In some instances, it
may be possible to arrange a face to face meeting between the prospective
Buyer and the Seller. This may provide additional insights into the operation
of the business not otherwise obvious from a review of written documentation.
Making An Offer
After meeting the business owner and touring the
business, the next step is to present an offer of purchase for the business.
Making the offer is not, however, the final step. In fact, it should be
viewed as the first of several steps, each of which bring the Buyer and
Seller closer to completing the transaction.
Since most sales involve privately held businesses, the Buyer is obligated
to make an offer before actually reviewing the business' internal financial
records. The Buyer should understand that its offer is always contingent
upon the Seller demonstrating the accuracy of its representations to the
prospective Buyer’s satisfaction.
It is the prospective Buyer's duty and obligation to verify the accuracy
of the Seller’s representations by retaining attorneys, accountants,
business appraisers or other professionals. Any agreement between the prospective
Buyer and Seller is “non-binding” until the prospective Buyer
has exercised due diligence in verifying the accuracy of Seller’s
books and records and all contingencies have been removed.
An Offer To Purchase will consist of the
following:
Due Diligence
The prospective Buyer and its advisors, attorneys,
accountants, business appraisers and other professionals will have a specified
period of time to complete a thorough review of the Seller’s books
and records, inspect the business premises and take other appropriate steps
to verify the Seller’s representations and remove all contingencies
(typically 5-10 days). The prospective Buyer and his/her advisors must utilize
due diligence in completing their review of Seller’s business in
a timely manner. When the due diligence process is completed and all contingencies
are removed, the contract becomes binding. Should the business fail to
pass due diligence review, the prospective Buyer may withdraw, modify or
amend the Purchase Offer. The due diligence procedure is costly and time-consuming.
It is only initiated after the respective Buyer and Seller have reached
an agreement on price and terms.
Financing
The majority of business purchase transactions
require some form of financing. We work with our Buyers to secure the
appropriate financing. This may involve Seller's financing, bank loan,
Venture Capital financing, Angels financing (private investor), SBA financing
and funds obtained through other financing resources. Regardless your
financing requirements, we will provide guidance and assistance in locating
the right lender.
Escrow & Closing
Your business purchase will be handled by an independent
escrow company. Typically an escrow is opened with the deposit of the Buyer’s
earnest money down payment, generally within three(3) to five(5) days after
all contingencies have been removed or satisfied. The average escrow will
close in one(1) to four(4) weeks if there are no recorded liens against
the business. A Cashier’s check will be required for the amount due
at closing of escrow.
Congratulations! You’re In Business
The escrow has closed and the big day has
arrived. The former prospective Buyer is now the owner of the business. A
new adventure is at hand. You are now in control of your own destiny.
When you work with us, we will guide you along the
way and help make your transition to business owner stress free and simple.
So, now is the time to go to our "Businesses
for Sale" section and get started on your search for your part of the American
dream.
Home