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|
|Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA
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.
|Helen Yoo, New Century Escrow - Escrow Services In 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.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence
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.
|Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California
Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.
|Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence
Chuck Post has 32 years experience in the laundry industry, specializing in assisting laundry buyers (and entrepreneurs) with buying or starting up, building, re-tooling, laundries throughout California. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations.
|Joanne Weber, Broker - Preschool Specialist - Southern California
The Ryan Craig Company is in its 35th year as the recognized expert in Southern California, dealing exclusively in the sale of preschools, Montessori schools, day care centers, and private schools. Our extensive list of references speaks for itself. Phone Joanne at 818-760-3684 for more info.
|Mike Brewer: Liquor License Broker, ABC Consulting Service
Liquor license brokerage and consulting services. We provide: Alcohol License Transfers Application Consulting & Processing, Liquor License Purchases & Sales, City Zoning Permits & Land Use Entitlements, Public Convenience or Necessity Findings and Letters. Phone Mike Brewer direct at 800-437-1100.
|Michael Davidson, Business Broker - Southern California
Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.
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