Steps to Buying a Business
- Initial Communication with Broker
- Buyer contacts Broker
- Areas of interest are identified
- Meeting time is scheduled or Registration Package is forwarded to Buyer
- Buyer contacts Broker
- Buyer Interview
- Broker interviews prospective Buyer
- Confidentiality Agreement signed to protect confidentiality of target business(es)
- Brokerage Disclosure signed acknowledging that Broker represents Seller
- Buyer Profile containing Buyer’s criteria and financial information or Financial Statement is completed by Buyer
- Buyer’s abilities and interests are identified
- Broker educates Buyer regarding acquisition process
- Buyer is provided preliminary information on businesses or franchise opportunities that match criteria
- Broker interviews prospective Buyer
- Buyer Focuses on a Business
- Buyer is provided detailed business information, including financials, equipment lists, inventory information, leases, contract rights and franchise rights
- Buyer researches industry and specific business confidentially
- Financing strategy formulated
- Cash purchase
- Obtain equity from personal assets
- Small Business Administration or other business loan
- Seller financing
- Seller and Buyer Meeting
- Meet at the business at a time acceptable to Seller
- Tour of the business
- Exchange of personal and business information
- Additional Information Provided to Buyer
- Information relevant to pricing and decision making process
- Verification of information occurs later during the due diligence process
- Letter of Intent (LOI)
- Buyer submits Letter of Intent
- Outline of negotiable and relevant points of offer
- Define contingencies that must be satisfied
- Timing of transaction defined
- Refundable Earnest Money is included as a goodwill gesture
- Broker presents the LOI to the Seller
- Seller accepts, rejects or counters the LOI
- If offer is countered, resolution is negotiated through Broker
- Earnest Money is deposited in Broker’s trust account following written acceptance of LOI by Buyer and Seller
- Buyer submits Letter of Intent
- Asset Purchase Agreement first draft is prepared by Broker and presented to Buyer for attorney and accountant review
- Buyer/Advisors present changes to Broker
- Broker reviews amended Agreement with Seller/Advisors
- Seller/Advisors present response to Broker
- Mutually acceptable Agreement is signed by the parties with Exhibits attached
- Steps To Closing
- Seller, Buyer and Broker determine timeline and prioritization of events necessary for Closing
- The Due Diligence Process
- Buyer/Advisors present a list of due diligence requirements
- Financials
- Premises inspections
- Health Department
- Fire Department
- Environmental Analysis
- Other
- Company contracts or agreements, including leases for real and/or personal property
- Tangible Asset review
- Furniture, Fixtures and Equipment
- Inventory
- Leasehold Improvements
- Patents or intellectual property
- Social media accounts
- Licensing
- Employees or Company operations
- Other
- Buyer creditworthiness, if applicable
- Buyer provides Seller with Financial Statement
- Broker obtains Buyer’s credit report for Seller
- Seller determines creditworthiness of Buyer
- Due Diligence findings are reported to Broker within defined timeline
- Concerns are resolved between the Parties
- Buyer/Advisors present a list of due diligence requirements
- Transfer of Leases, Contracts, Licenses and Franchise Rights
- The Parties work together to transfer any contract rights or obligations
- Continuing Seller obligations after Closing determined/negotiated on an individual basis
- Financing
- Broker assists Buyer in obtaining financing
- The Closing
- Broker works with the Parties/Advisors and Closing Escrow Attorney to prepare Closing Documents, release liens and formalize the business sale
- Costs to Buyer
- Personal Advisor fees
- Sales tax on personal property as per Asset Purchase Agreement
- Escrow Attorney Fee $500 – $1,000
- Prorations at Closing
- Deposits as required
- Other, as applicable
- Final Inventory is taken
- Parties Sign Closing Documents At Closing.