Five Steps To Buying A Business

Initial Inquiry
Most people use the web to find businesses for sale. Your inquiry lets the listing broker know that you are interested in more information on the business. Typically, the broker will be able to share additional information, but will maintain the confidentiality of the business and won’t release really sensitive information until a Non-Disclosure Agreement has been signed.

Remember, a good business will attract many potential buyers, so be responsive and engaged in the communication process.

Buyer Profile
A professional business broker will work with you to complete a Buyer profile to gain additional insight into your ideal business venture. Your broker will talk to you about your interests, lifestyle and financial needs. This will help to identify the best opportunities available that will meet your goals and needs.

FACT: Most people do not buy the business they initially inquired about.

The broker can give you a preliminary sense on your finance-ability and will share valuable information regarding loan programs and options.

Seller Meeting
At this point you have signed an NDA and been privy to the most pertinent facts pertaining to the business. It’s now time to meet the Seller, this may include a full tour of the business and will give you the opportunity to talk to the Seller about why they are selling, financial trends, competition and strategic improvements and investments in the business. What are the high and low points of owning the business. Ask yourself, “How do I feel about the business?” “Should I make an offer?”

Due Diligence
While a business broker cannot do due diligence for you, they will manage the process and facilitate communications and exchange of information between you and the Seller. Due diligence is when you dig in, investigate and verify all information presented to you. You may be asked to deposit funds in an escrow account to demonstrate your seriousness as a buyer while you complete your discovery.

Common areas investigated may include historical financials, inventory, asset list, leases, permits, contracts and patents/service marks.

Typically, an average Main Street business due diligence timeline is about 4 weeks.

Closing
If all steps of the process have been done right, closing is merely getting together to sign the papers. You may have had your own attorney representing you to review all the documents, but many cases the you and the seller may mutually agree to use an experienced transaction attorney in order to save time a money.

Congratulations, you’re now a business owner!