Preparing To Buy a Business
Steps to buying a business:
Desire & Ability
Once you have decided you want to own a business and are qualified, both financially and have some related experience, and are ready to make a commitment to purchase a business, we can get the process rolling.
Disclosure
You have to sign a non-disclosure agreement (NDA) promising to maintain confidentiality for all the information we will provide you on the business.
Personal Information
We will need information about you, such as a resume and a personal financial statement. We have to understand your needs so that we can find a suitable business for you. The seller wants to know and understand your background, especially if the seller is offering some financing. Furthermore, if the premises are leased, landlords will want to make sure that you have the experience to successfully conduct the business so they will continue to receive rent, otherwise there may be an issue transferring the lease over to you.
Information Review
Once we have all the pertinent information from you, we will be able to suggest possibilities, review various types of businesses, and help you select the right one for you.
Inspection of Business and Meeting the Seller
We will arrange for you to visit the business and to meet the seller and ask any questions. The seller will also want to ask you some questions. Many sellers want to protect the loyalty of their employees and ensure the success of the business with a new owner.
Offer to Purchase
Once you have selected the business that you are interested in, we will prepare an offer to purchase. A deposit will be required to show your seriousness and this will be deposited in an attorney’s trust account.
The seller may accept or counter your offer. The offer will be contingent upon you or your CPA making sure that the books and records of the business are to your satisfaction. This will require an examination of tax returns, POS records, bank statements, vendor invoices and any other material that the seller can provide. This is called the “due diligence” period. We will also work with the landlord to get an assignment of the current lease or a new lease for you. Once you are satisfied with the financial analysis, we will prepare a document notifying the seller that all the contingencies are removed and the offer is binding.
Preparing for the Closing
We will provide all documents to the closing agent or attorney so they can prepare the closing documents.
Inventory
Arrangements are made for you and the seller to count and price the inventory (if required).
Closing
All parties will meet at the closing agent or attorney’s office to sign documents.