Buying a Business

Buying a Business
Buying a Business

Mar 9, 2022

Do you know:

  • What to evaluate when buying a business?
  • What questions to ask when buying a business?
  • What red flags to avoid when buying a business?
  • What legal steps are required when purchasing a business?
  • What to do if there is a snag in the process of buying a business?

If you want to buy a business, but you don't know how it works or what to do, I can help you through the undertaking.

Often, prospective buyers are unaware of the complexity of the task. Additionally, they tend to overestimate their ability to negotiate effectively. When the process is not professionally managed, the risks increase dramatically. Naturally, many business owners have a strong emotional attachment to their business, which affects their valuation. Even if a buyer can overcome that attachment, and hammer out a fair price, unforeseen difficulties can still cause a deal to fall apart. Some potential pitfalls are:

  • Difficulty in arranging showings
  • Heated emotions cause a breakdown in negotiations
  • Lawyers or accountants are dissatisfied with information or documentation
  • Due diligence reveals undisclosed issues
  • Subjects are not met before deadlines

There are countless more. So how do you buy a business quickly, smoothly, and for the minimum price?

You get expert help!

Step 1: Make an Appointment

Contact me to arrange a discussion about your goals, buying criteria, finances, and experience. We try to understand your situation thoroughly to achieve the best results.

Step 2: Determine Objectives

I will work with you to clarify realistic objectives and match them with relevant listings. Also, sellers want assurance that prospective buyers are appropriately qualified with sufficient financial resources and experience to purchase their business. Accordingly, we work with conscientious attention to the needs of buyers and sellers alike to maximize the chances of a successful purchase.

Step 3: Confidentiality

Before any sellers share detailed information regarding a listing, you must sign a Confidentiality Agreement. This agreement protects the seller while limiting your competition to only serious parties. Once it’s signed, you will gain access to details such as price, location(s), annual sales, cash flow, tax returns, employee data, lease specifics, profit-and-loss statements, etc.

Step 4: Taking a Tour

After you have had a chance to review the listing, if you are interested, it's time to meet the current owner and view the physical location.

I will coordinate a private tour. Additional meetings with sellers can occur at our office, the business, or a neutral site. Of course, having ample opportunity to ask questions about company operations or the presented information is crucial.

Step 5: Purchase Offer & Acceptance

When it’s time to make an offer, we will assist you in including conditions and contingencies that protect your interests. Sometimes business value calculations make assumptions about buyers' skill sets and experience. However, in reality, your knowledge, experience, skills, and finances are not the same as anyone else's, and these factors can affect the deal. We will manage all communications and negotiations until both parties agree on final terms.

Step 6: Secure Financing

I can support you in procuring financing. Buyers will typically provide a 30 - 35% down-payment of the purchase price, with the rest available through lenders.

Step 7: Closing

Once financing is secured, a mutually agreed closing date is determined. I will work closely with both parties' legal and financial representatives to prepare the closing documents. Finally, you will meet the seller to sign the papers and take ownership!

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