Finding the right business is not an easy task, it takes time, patience and diligence
STEP 1. Develop a "target business profile" which lists a set of specific criteria for the business you expect to acquire. You need to identify the amount that you are willing to invest, the acceptable level of risk, the minimum expected return, and the time you can devote to learning and managing the business. In the same way as the startup of a new business, the business for sale must match the personal and financial objectives that you have written out. Your profile should also assess your level of expertise and experience in financial matters, marketing and business management. Yes, you can always hire people to take on these tasks, but you do need a basic understanding of the principles.
STEP 2. Locate business opportunities with the potential to grow and offer an attractive return on investment. You can find potential opportunities by visiting the many business websites, reading classified advertisements, discussing opportunities with business brokers, and checking industry sources. Resist the temptation to buy the first business that looks good; step back and look at it objectively. We can help in this task and also with financing. We have access to some of the top banking and financial institutions in the country.
STEP 3. Make an appointment to see the broker for an initial introduction to the opportunity(ies). We will provide you with brief financial reports, business history, price, and reason for sale. This will allow you to know more about the business, how long it has been for sale and the financing adjustments that needs to be made. Dont forget this is confidential information and you will be expected to sign a confidentiality agreement and possibly provide a personal financial statement, especially if you expect the seller to offer seller financing. We will spend quality time to learn about you and your needs.
STEP 4. If you find the materials we presented adequate and the business to be sound, be sure to request for additional meetings to probe for more information. It is important to look at a business at different angles. We are alwys pleased to arrange visits to the seller.
STEP 5. Review the facility closely to determine how well it has been managed and maintained. For service businesses, talk with the employees and even customers. Prepare a checklist of information needed, which should include the following:
- A complete financial accounting of operations, including all income tax returns and state sales tax forms, for at least the past three years or from the beginning of operations if not established that long. Listing of all assets to be transferred to the new owner, including item breakdown of all inventory as of the last accounting period.
- A statement regarding any legal action past or pending against the present operation.
- A copy of the business lease or mortgage.
- A list of all major suppliers to the business to include names and addresses of those to contact who are familiar with the operation.
STEP 6. Upon a satisfactory personal examination of all information received you should then:
- Visit an accountant for further interpretation of financial information.
- With the owners permission, speak to the landlord or mortgage holder to inquire about the transfer of the premise to a new owner. In the case of a lease, the expiration date should be discussed and if possible renegotiated to the intentions of the new owner. An on-site review of the facility should be conducted to assure it is in satisfactory condition.
- Check with the chamber of commerce and other local assistance centers to discuss the future of the market and the location.
- Meet with industry representatives presently selling to the business to validate the sales reported and an opinion as to the likelihood of future growth of the business. (this can only be accomplished generally during a due diligence phase, as you will have to obtain the owners permission as this could breach your confidentiality agreement.)
STEP 7. Request permission from the seller to allow you to spend time at the operation observing and surveying customer satisfaction.
STEP 8. Determine a fair price to offer for the business. It should be noted, however, that there is no universally accepted formula for determining business worth. Some of the approaches include book value and capitalization-of-earnings approach. Before you present your offer to the seller, determine what financing arrangements can be made available through a lending institution or the seller. Present the offer in writing to the sellers broker. Normally, at this point, there will be negotiation. The more information that you have collected and analyzed, the more confident you will be in presenting your case. As the buyer, you will have to use your best persuasion techniques to point out the validity of the offer and the advantages to the seller of accepting the offer. Be prepared to walk away if a major obstacle prevents you from obtaining important objectives.
STEP 9. If an agreement is reached, contact an attorney to draw up a suitable purchase agreement. Your attorney will research state records for any liens against the property for failure to pay a debt. You as buyer must go into the process with your accountant and a lawyer experienced in business buy-outs. The agreement should be contingent upon examinations of all assets to validate what is represented is true. Before signing a purchase agreement, the buyer should be present when a final inventory count of assets, including inventory, is taken.
STEP 10. Review the listings we have for sale that possibly match your interests and buying criteria. There may also be businesses we have not advertised or are in the process of advertising. If the businesses listed do not match your needs or the search criteria is more complex, our Intermediaries will discuss the BBNY Buyer Search Services, a comprehensive set of buyer programs designed to find you or your company the best business that matches your requirements.
Our programs are designed to locate businesses currently available on
the market, or using our unique search services, businesses not yet on the market!
We know its a frustrating experince trying to find the right business that's why we have structured a step by step process to help you in this task. Whether you're an individual or a company, our intermediaries can show you how we can help you find the business that meets your needs. Not every business is right for you, but we do repsesent high quality businesses that may may match your need. The following steps are to assist you in the process of finding and buying the right business: