What You Should Know to Buy a Business

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Buying a business is a time consuming and complicated process. I help you through the maze of finding a business that is right for you and assist you in negotiations and continue assisting you right through the close of escrow.

The scary part of buying a business is that there are no guarantees. You must rely on your ability to effectively manage and operate the business you have chosen to buy. There are ways to minimize your risk and during the due diligence period, you will have the opportunity to review the information about the business, discuss it with any advisors and make your decision about finalizing the sale.

Typically the process of buying a business begins with a visit to the location and review of the preliminary information. If the business is of interest to you I will set up a meeting for us to meet with the owner of the business to get your specific questions answered. The next step is to write the offer. I will meet with you and we will go over the offer in detail. It is at this time that you provide a deposit check. After the offer is accepted you begin your due diligence period.

This is when you will review the “books and records” of the business. You will make your final determination on whether or not this is the right business for you. If the business is the right business for your escrow is opened, your check is deposited into the escrow account and the process of finalizing the purchase is begun. This process usually takes at least 30 days. If SBA financing is involved it can take as long as 4 to 5 months.

Most businesses are sold for either “all cash” or with the seller “carrying a note” for the balance of the purchase price over what the buyer pays as a “Down Payment”. A small number of businesses will qualify for SBA guaranteed bank financing. Typically these businesses will be “pre-qualified” and you will know in advance if that type of financing is available.

Experience in the field or industry of the business you are buying is helpful but not necessarily required. Many of our buyers are first time buyers. The sellers will usually provide a training period. They will also generally sign a “covenant not to compete” if you make that request.

It is your responsibility as a buyer not to infringe upon the seller’s relationships with their customers, employees, landlord or suppliers. You will be asked to sign a Confidentiality Agreement which consists of a Non-Disclosure and Memo Record of Showing Agreement and a Buyer Profile Sheet. These must be completed in full before the name, address or any sensitive business information will be made available to you. You must agree to honor the terms of these agreements in order to successfully purchase a business with my assistance.

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