|
|
|
Associate Equity Business Sales & Acquisitions
The Premier Place to Go to Buy or Sell a Business
|
|
|
Seller Services
Valuations
Appraisals
Buying a Business
Businesses for Sale
Businesses Over $1M
Buy a Franchise
Our Professional Team
Testimonials
Become a Broker
Buyer Forms
Contact Us
Resources / Site Map
Home
|
|
The Process of Buying a Business
|
|
|
|
|
|
What kind of business am I looking for? How much will I put down? What is the "right business" for me?
This guide will give you some basic information to help you answer these questions and show you what to expect when buying a business. We will also show you how Associate Equity will guide you through this exciting process. There is no charge to you for this service.
Getting Started
Before Associate Equity Business Sales & Acquisitions can help you find a business there are a few questions you will need to answer.
How much money do I have to put down on this business? Also how liquid that money is can be crucial. Generally, you should expect to make a down payment equal to the cash flow of the business. SBA financing requires a minimum of 20% down that can be obtained within 7 business days. If your money is in real estate and not very liquid, you will need to make that money liquid before we start showing you businesses. Be sure to leave enough money in the bank for working capital and contingencies. A basic financial statement will help us determine your purchasing power.
A general rule of thumb is you will earn in the first year what you put down. If you have $25,000 to put down it is very unrealistic to expect to make $100,000 per year until you build the business up to $100,000 or save enough money to put more down.
When do I want to buy? The broker who is assigned to you will need to know if you are going to buy right away or just thinking of it in the future. In order to go through the rest of the process we will need to know that you are ready to make a decision once you find the business you like.
What types of businesses interest me? As a new business owner, you will want to make sure you buy a business that you like, that you can manage, and that gives you and your family the income you need. If you are going to work hard, make sure you enjoy what you do.
Am I interested in buying a franchise? Associate Equity works with a diversified group of franchises to help you find the franchise that matches your criteria. Be sure to let your Associate Equity Business Sales & Acquisitions broker know if you are interested in a franchise.
The Initial Meeting with Associate Equity Business Sales & Acquisitions
Now that you have some basic idea of what you want and what you will put down, your Associate Equity Business Broker can educate and guide you through the business buying process.
Confidentiality – The first step in the process to finding you the right business is for you to sign our Confidentiality Agreement. Selling a business must be kept very confidential. A breach of confidentiality may cause employees to leave, competitors to use it to their advantage, customers to shop somewhere else or suppliers to change terms and conditions. Associate Equity has a fiduciary responsibility to our sellers to only show businesses to qualified buyers who will abide by the confidentiality guidelines.
Profile Information – The next process is the profile. This information will show how much you have to put down, where the money is, and when you want to buy. Associate Equity has a fiduciary responsibility to our sellers to only show businesses to buyers financially qualified to buy their business. It also helps us find a business that matches what you are looking for. We don't want to show you a business that you are not interested in, don't know how to run, or one that is not making enough money for your lifestyle.
The Education – When you meet the Broker in our office, we take you through the Business Acquisition Process to explain the steps and process in buying a business as well as pricing, terms, cash flow, what to expect, and things to consider to make the right decision.
Showing you the Businesses – We can now begin discussing the businesses that match your criteria and begin showing you these businesses.
Viewing a Business
Now you are ready to view the business. There are two ways you will do this: your may anonymously visit a business open to the public as a customer, or we will make an appointment with the owner for businesses that do not normally have people walking through.
Viewing the Business on Your Own. If the business is open to the public, like a retail store, we may ask you to view the business anonymously. You will go in as a customer, order something, and casually, discreetly observe the business. If you do this, it is very important not to go in "snooping around" the business and asking questions. This could break the confidentiality guidelines. You are only to ask questions once your Associate Equity broker has set up an official meeting with the Seller.
Meeting between Seller, Buyer and Associate Equity Business Sales & Acquisitions. The Seller-Buyer meeting is designed to let the two principals get to know each other and learn about the business in general. Your goals are to answer these questions: Do you like the business? Can you manage the Business? What you can do to improve the businesses? There are no negotiations or exchange of financials at this meeting.
What to Expect
I am looking for the perfect business! There is no perfect business. A perfect business has no room for improvement. To get the best value and return on your investment, look for ways you can improve the business and make it better.
What about financing? Many businesses sell with some seller financing. Owner financing shows the owner believes in the business and "likes and trusts" you enough to lend you money. Normally you will put down 30% to 50% on the business. Otherwise, Associate Equity Business Sales & Acquisitions has many lenders that can work with you to get your purchase financed. Your Associate Equity Business Sales & Acquisitions Broker will use his/her expertise to help you come up with creative financing terms that will satisfy both Buyer and Seller.
I have $25,000 to put down. How much can I expect to make? As a general rule of thumb, you can expect the business you are buying to be making about the same that you are putting down. If you have $25,000 to put down, it is unreasonable to expect to make $100,000 per year. You can, however, probably expect to make $25,000.
What will my payments be? Use an Amortization Calculator or ask your Associate Equity Business Sales & Acquisitions Broker to help you determine what your monthly payments will be on your new business.
How do my attorney and accountant come into play? After you have found a business you like, we recommend you consult an accountant and an attorney as well as a business mentor or family member who has related experience. ADVISORS advise. They do not make your decisions.
Price of the Business
How do you determine the right price for a business? There are number of formulas, rules of thumb, and financial calculations that analysts use to determine theoretical value. The "True Owner's Cash Flow" is the most critical. The cash flow of the business must do three things: 1) maintain operations 2) make the payments on the loan and 3) provide you and your family the lifestyle you want. If you can buy a business for the amount you have to put down and still earn the desired profit, then that is what the business is worth to you. Price and Terms of the agreement are important, but the real measure is, are you comfortable?
The Purchase Offer
Now you are ready to make on offer on the business. Associate Equity Business Sales & Acquisitions has all of the forms you need to help you. You will put in the offering price, terms, and contingencies to make a "Buyer Friendly" and safe OFFER. You will also need to be prepared to attach an earnest money check with the offer which is a small fraction of the down payment. Your Associate Equity Business Sales & Acquisitions Broker will then take the signed offer to the Seller. If the Seller accepts the offer, you proceed through Due Diligence and remove your contingencies one after another. With an agreement, Due Diligence completed, and contingencies removed, a transaction attorney prepares the legal documents for approval prior to close. Associate Equity Business Sales & Acquisitions will guide you throughout the process.
Everyone wants to get a good deal, but offering an unreasonable price increases the time to get agreement and can create bad feelings that hurt negotiations. Offer a price that is fair for both parties.
The closing usually takes place within 4 to 6 weeks after an agreement is made.
After you Buy
Documents signed. Keys in your pocket. CONGRATULATIONS! You are in business! Build on the things that made the business successful and once you know and are familiar with the success formula, slowly implement your improvements.
|
For additional information,
contact Associate Equity Business Sales & Acquisitions.
|
|
|
|
|
|
|
|
|
|
