The Buying Process

Having a general understanding of the business buying process, before you get started, can determine whether it’s a rewarding experience or a frustrated failure.  This brief video & the more detailed explanations provided below, cover the major components of buying a business.  For more information, be sure to visit the Buyer’s Tutorial >> and Frequently Asked Questions >> pages of this website.

Step 1: Evaluate your resources. Then reality check!
Understand your own personal goals, objectives, and financial requirements. Be realistic about your expectations and financial resources.

Step 2:  Commit
Business ownership is not for the “faint of heart.”  Successful Entrepreneurs simply cannot spend a lot of time second-guessing themselves.  This doesn’t mean they make rash decisions.  Rather, they commit to the research, patience, and time involved in gathering their facts.  Once those are in place, a decision is made, and they move forward.  The same principals apply to buying.  Get all your facts, expectations and resources in place.  If ownership is right for you commit to the work and patience involved in purchasing a business. It is a process and rarely happens “over night.”

Step 3:  Meet with a Broker & Sign a Non-Disclosure Agreement
In your initial meeting, get to know your broker.  Don’t be afraid to ask about their background and experience.  You should also expect them to ask you some specific questions.  Be prepared to provide accurate information about your background, your financial capabilities, skills, goals and expectations. This information helps the broker zero in on the types of businesses best suited to your requirements.  Most business owners want the sale of their business to remain confidential, so you will also be asked to sign a Non-Disclosure Agreement.  This agreement basically states that you will not disclose the identity or share details about any business you are show to third-parties (without prior written consent).

Step 4: Business Search
We will help you find suitable businesses.  You will need to complete and submit a Non-Disclosure Agreement (NDA) for each business, so I can provide you with detailed and confidential information on each.  BB&C spends a lot of time gathering specific information about the financials, processes, management and structure of each business.  We develop detailed profiles, which can then be shared with you.

Step 5: Visit the Business in Person
If you like what you see on paper, we will arrange a confidential business showing with the sellers.  This is your opportunity to get a feel of the business and ask any additional questions you may have.  There are no stupid questions, and often times you think of addition questions after reflecting on this initial meeting.  We will communicate those to the Seller and get the answers you need.

Step 6: Contingent Purchase Agreement
If the business seems to be a good fit, we will help you draft a Contingent Purchase Agreement.  Some people panic when they hear the words Purchase Agreement.  They think they are locked-in to buying the business, but this is not the case.  A Contingent Purchase Agreement defines the terms upon which you are willing to buy.  These often include obtaining a satisfactory lease, further satisfactory review of Financials, and the ability to obtain financing.  The accepted agreement obligates the seller to sell, but the buyer is not committed unless and until all the contingencies have been met.

Step 7:  Due Diligence Process (Books and Records Examinations)
The Contingencies to the Purchase Agreement trigger the due diligence process.  In this process you have the opportunity to inspect the owner’s books & records.  It’s an opportunity to verify prior representations and confirm their accuracy.   For example, do the P&L’s or receivables match the information previously disclosed on the Tax Returns.  I coordinate communications during this process and will help provide ongoing updates.  I can also “quarterback” the efforts of legal and accounting professionals with lenders and closing attorneys to insure that the process moves forward in a timely manner.

Step 8:
Meanwhile, if financing is necessary, I can assist you with the lending process. There is no charge for assisting you.

Step 9: Sale Closing
When every contingency has been meet final preparations to transfer the business begin.  Closing documents are drafted, and every effort is made to transfer the business as seamlessly as possible. I work with each party to get everything ready for the new owner to take over.  Often, I am present for the Buyer’s initial staff meeting with employees.  A training and transition period, (defined by the Purchase Agreement), now begins.  It’s a chance to become familiar with the business operations, employees, clients and vendors; all with the Seller at your side.

Purchasing a business is a complex procedure.  It demands the experience of someone familiar with the process. The Intermediaries and support staff at BB&C have completed hundreds of transactions over the years.  We are dedicated to seeing the details through, and ready to help you realize your dream of business ownership.