Get the simplified business buying process explained from experts in business acquisition.
The Business Buying Process Explained
Many people looking to purchase a business are doing so for the first time. Maybe you have experience at starting your own business from the ground up, but buying a business is a completely different process with a unique set of requirements.
Buying a Business in 8 Steps
Hire a Broker. Yes, you can buy a business without the help of a broker, but it is a complicated undertaking made much more manageable with the help of a qualified professional. They’ll do most of the difficult work for you: prescreening businesses, helping match you with businesses that meet your interests and goals, assisting you with paperwork, and the toughest part–negotiating with the seller. If you’re considering purchasing a business in Florida, contact the experts at Emerald Coast Business Brokers to get moving in the right direction.
Identify the Business. In many cases prospective business owners have an idea of a location, industry, and specific businesses they’re interested in. If you don’t, you’re not alone. Business brokers specialize in matching you with businesses that are a good fit.
Sign a Confidentiality Agreement. Once you have identified a business to purchase, both you and the seller will sign a confidentiality agreement. This agreement ensures discreetness throughout the entire process. In most cases, the business’ employees and customers are unaware of the pending business sale, so a confidentiality agreement helps a seller proceed with confidence.
Review the Business. This is the process through which you (with the direction of your broker) will analyze the business to make certain it meets expectations and goals. During this phase, you will examine records and ask all questions you have about the business. This is typically where you will have financial advisors, attorneys, etc., assist.
Negotiate. This is the phase where an unbiased broker is most needed. Both parties will work to negotiate the terms of the sale–including price and additional terms of the takeover, including exclusivity periods and any training required after the transfer.
Make an Offer. A written offer is required to purchase a business–and in many cases this should come in the form of a purchase agreement or contract of sale in order to keep the seller from entertaining other offers (and to encourage the buyer to take your offer seriously). Normally once the offer is accepted, a deposit is required.
Due Diligence. After the seller has accepted your offer, before you prepare closing documents, you will perform due diligence. This involves reviewing the last three years of financial statements, including tax statements, monthly expense reports, balance sheets, cash flow statements, and employee records. The more records you are able to review, the more successful you will be at due diligence. Once you are satisfied with the details of the business, you can move to preparing the closing documents.
Complete the Deal. Your broker will assist in making certain all parties involved (lawyers, accountants, etc.) are pleased with the paperwork prior to closing.
Is the business buying process really that easy?
While buying a business is a complicated process, with experienced brokers on your side, success is definitely attainable. Emerald Coast Business Brokers will walk you through purchasing an existing business from start to finish. Contact us for help through the process.