People who are looking to purchase a business for sale are generally lumped into an overall category referred to as 'Buyers'. I can tell you from many years experience as a business broker that all Buyers are not created equal. How they approach the task of interfacing with brokers and meeting with sellers can make their search very productive or exceedingly frustrating and inefficient.
Here are some of the Do's and Don'ts to consider:
1, Accurately represent your financial capacity and accompany that information with a personal financial statement and a copy of a recent Credit Report. This type of candid disclosure is very much welcomed and appreciated and is information that is going to have to be disclosed at some point anyway. The information allows a knowledgeable broker to know what price range of business is reasonable for your circumstances and it also lets a seller know that you are real.
2. Clearly communicate to brokers the types of businesses that you are NOT interested in so that you can help eliminate category after category. While you might be the rare buyer that knows exactly what type of business that you are looking for, also be aware that too much specificity dramatically reduces the chances of finding such a business unless you are willing to consider relocating.
3. If you have some prior credit, legal or other issues (DUIs, bankruptcy, etc.) and if you are going to need SBA business purchase financing, the first order of business will be to get pre-qualified for SBA financing with a lender who has expertise and experience in making 'business acquisition loans'. I mention this as clearing up some of these issues (assuming that they can be cleared) means going through a cumbersome bureaucratic process and it can easily take 6 to 9 months or more --- and no seller is going to wait for that kind of time period, so take care of those types of issues BEFORE you start your search.
4. You need to be timely and responsive once you are shown one or more businesses so that, whether you are working with a broker or a seller, they know what you are thinking, what you concerns are, etc.
1. There is a time and a place to negotiate price, and it isn't when you first see the listing or the first day that you get information or view a business. Simply put, no one can have an intelligent opinion on value until they have detailed financial and other information.
2. Do not violate the confidentiality that surrounds virtually all transactions. This means that you should not talk to the owner in front of employees, or talk to his/her competitors or do anything else that would reasonably concern either a broker or seller.
3. Do not misrepresent or exaggerate your resume, skills, background or abilities, because most people can see right through people who play that game and once your credibility is tarnished you are going to be under a major handicap in negotiating to buy a business.
4. Don't do all the talking, Prior to meetings, create lists of intelligent questions that clearly indicate that you have read the information about the business and then ask and listen so that that you avoid coming off as a "know it all" type of person.
5. Don't, unless you have valid reason based upon information discovered during due diligence, continuously attempt to renegotiate price and other issues upon which agreement has already been reached.
About The Author: Steve Fitzgerald is a business broker in the San Diego area assisting business buyers and sellers throughout Southern California. You can reach Steve by phone at 858-320-0474.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|George Lanza, Business Broker, At Plethora Business Sales
Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.
|Elizabeth McGovern: Escrow Services - SF Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
|William Park, Business Broker - Southern California
Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
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