Purchasing a Business
The primary role of a consulting intermediary is to bring Buyers and Sellers together in a manner that will facilitate the transfer of business ownership. A fundamental part of the process is to educate clients about the sequence of events that produce a successful transfer of ownership, which includes providing both parties with pertinent information on buying or selling a business.
For the first time Buyer, the following brief outline of the process should serve as a road map to achieve business ownership. If you are a seasoned veteran, who has bought and sold other businesses; you may find the following an update to a process, which over time has evolved and changed like any industry, and not just a reiteration of the obvious.
Step 1: Make a personal commitment to become a business owner and position yourself to be prepared to act decisively on the business opportunity you select as the platform for your future. For more specific information on what preliminary steps you should take; click on "Get Ready."
Step 2: Review the Outline provided for initial information on the business that you have inquired about from advertisements. Even if this particular business does not appear to be of interest, proceed to Step 3. The intermediary visits with sellers on a daily basis, and could find a business of interest in the near future.
Step 3: Meet with the intermediary and discuss what type of business will be the best fit for your qualifications, experience and objectives in business ownership. A pre-qualified Buyer in the intermediary's database is positioned for information on businesses that become available for purchase prior to market exposure.
Step 4: Subsequent to providing documented financial capacity to purchase the business you have inquired about, and agreeing to confidentiality; more detailed information on the business will be provided in a Confidential Business Profile.
Step 5: After reviewing the business profile, contact Province Group to set up a time to tour the business and meet the owner. Prepare a list of any additional questions you may still have and present it to the intermediary, well in advance of going to the business to allow time to gather the information for a response.
Step 6: If you decide this is the business you want, Province Group will assist you in preparing a bona fide offer and present it accordingly for acceptance.
Step 7: The intermediary will make every effort to obtain the Seller's acceptance of your offer, as written, by using his experience and expertise to emphasize the positive aspects and the incremental benefits of the offer. However, since people have different perspectives, there can be some negotiation to reach agreement on price and terms.
Step 8: Once the offer is accepted, the loan commitment from the lender must be finalized along with any lease transfers and an approximate closing date.
Step 9: Due diligence is next in the process to verify all of the Seller's financial information. To expedite the procedure, it is best to prepare a list of specific documents requested from the Seller to substantiate all financial information. The request should be thorough, but not voluminous or overburdening. It is recommended that you enlist the assistance of your accountant for this step.
Step 10: Depending on the type of business, an inspection by the buyer of the premises and also furniture, fixtures and equipment, or possibly enlist a qualified professional, to confirm condition of tangible assets as represented by the Seller.
Step 11: After due diligence and inspections, all contingencies will be signed-off on as being satisfied, the Seller will sign appropriate disclosure documents, and additional closing information prepared, i.e. transfer of all utilities, licenses, permits, phones, fax number, web site, e-mail address, arrangements to procure or transfer insurance, and all other information required to finalize the appropriate closing documents. Next, a physical inventory must be taken just prior to closing. If receivables are to be transferred, a list of such should be prepared.
Step 12: Closing is the legal transfer of ownership and disbursement of funds.