Buying A Business
The Buying Process
The Process of Buying a Business
When we talk with potential buyers we often find that many are not familiar with the process inherent in acquiring a business. The following is a brief overview of that process.
- Personal Considerations/Timing when do you want to purchase a business; will you need to leave current employment; understand that it can take six months to two years to actually be in your new business.
- Financial /Investment what is your net worth; how much can you personally invest in a business; do you have collateral to offer if needed to finance a business.
- Type of business is there a niche in which you have experience; is there an industry or type of business you are definitely not interested in; a business or industry that plays to your background will have definite advantages?
- Looking for opportunities there are a number of web-sites that offer lists of business opportunities by geography, type of business, etc; contacting local business brokers or viewing those websites expose you to additional opportunities; look at businesses you can afford to purchase it will only be frustrating for all parties involved in this process if you attempt to consider businesses beyond your financial capability.
- Coordinate with the intermediary most business opportunities are offered through an intermediary (usually a business broker); recognize that you will need to provide confidentiality agreements and personal financial statements before proceeding with the process.
- Reviewing potential opportunities when given access to the information on a business, then it is time to evaluate the viability of the business for you; the intermediary that has listed the business will likely discuss the business in detail.
- If you decide that you have an interest in pursuing a business, a buyer-seller meeting is the most likely next step; generally the intermediary will set-up and facilitate buy-seller meetings and the showing of the business itself.
- When the decision is made to pursue the purchase of a business, the next step is usually to submit a non-binding letter of intent (LOI). The LOI provides a basis to begin negotiations on price, terms and all other matters relative to the purchase of the business.
- Since financing continues to be challenging in this business environment, it is appropriate to begin searching for financing options at this point in the sales process. A good business broker will help lead a prospective buyer through that process.
- After the formal purchase agreement is executed and financing is underway, it is important that due diligence is performed. The buyer is given access to the sellers books and records to make certain that the representations made through the sales process are correct.
- It is important to a buyer that they access professional advisors attorneys, CPA, financial planners as appropriate to assure that their interests are appropriately represented.
- Typically the closing is a quick, smooth meeting where the appropriate documents are executed with the assistance of attorneys.
Although Business Acquisitions, Ltd., typically does not do buyer representation, we are happy to talk with you and answer questions you may have about the process. Certainly review the businessess that we currently have available and contact us if you have an interest in any of those opportunities or if we can answer any questions.
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