Steps In Buying A Business

Identify the type(s) of business(es) that are of interest to you. Prepare a personal resume outlining your work experience and educational background. Prepare a personal financial statement. Determine the amount and sources of liquid funds available to you for a down payment. Order a copy of your credit report from all bureaus.

Once you have gathered all the above information, contact our office for an appointment. Prior to the appointment, we will forward you a Non-Disclosure Agreement for your signature. This agreement essentially says that all of the information disclosed to you will be treated with the utmost confidence. You will not disclose any of the information provided to you to anyone, with the exception of your professional advisors, who will also be bound by the terms of this Agreement.

When we receive the executed Non-Disclosure Agreement back from you, we will forward you our Master Listing Report. This is a blind list of all of our listings organized by category. It will give you the price, basic geographic area, and brief description.

If any of the listings on the Master Listing Report are of interest, call our office and request further information on those listings. We will then send you a detailed sales presentation for those businesses of interest to you. The sales presentation will provide you with the name and address of the business. If you go to visit the business, go as a customer only. Please do not speak to any of the employees as they typically do not know the business is for sale.

If after having visited the business(es) you think that you may have further interest, schedule a follow-up appointment with us to discuss the opportunity(ies) further.

The next step in the process is the preparation of an offer to purchase the business via a  Letter of Intent. Our office typically prepares the Letter of Intent for the buyer. The Letter of Intent would include the following:

• Offer amount
• Deposit amount
• Contingencies including but not limited to the following:
  • Due diligence/examination of the books and records;
  • Satisfactory inspection of the premises and furniture, fixtures, and equipment to be conveyed
• Financing terms/amount
• Transfer of existing liquor license or other applicable licenses
• Assignment of lease for the premises
• Settlement date

Once the Letter of Intent has been accepted by the seller, the due diligence process may begin. Typically the seller will provide you with a year to date Profit and Loss Statement and the last three years Income Tax Returns. Concurrently, while you are conducting your due diligence, your attorney will prepare a Contract of Sale or Asset Purchase Agreement.

Also concurrent with the above, you will make application for financing. The broker can assist you in said process by making recommendations of lenders who may have an appetite for the deal.

Upon satisfactory completion of your due diligence, approval of financing, transfer of applicable licenses, and assignment of the lease, settlement may take place. Prior to settlement, your attorney will have prepared all the settlement documents, run a lien and judgment report to determine that the buyer can convey the assets to you free from encumbrances, and negotiate any modifications to the documents requested by the seller’s attorney. Typically the buyer’s attorney will conduct the settlement and collect and disburse all funds at closing.

Congratulations! Now the hard work begins. Remember why you bought the business. You bought it because it was profitable and operating in an efficient manner. Remember, the business is not broken so don’t fix it. Continue to run the business as it has been operating for at least 6 months. After you have had sufficient time, you may begin to tweak it, making subtle changes. Remember without your loyal customer base, you have no business. So, NO DRASTIC CHANGES! Good luck and don’t hesitate to call us for advice or our services in the futures.