What Should I Do If Other Buyers Are Trying To Buy The Same Business?

Comments & Replies: 4     Views: 9225     Posted By: Peter Siegel MBA  Peter Siegel MBA: BizBen Founder, Lead Advisor

Buying a small business is hard enough when there is no competition, so how might a buyer navigate the process when there is additional competition from other buyers? Peter Siegel, MBA (BizBen ProBuy Program) and others explain a few of the ways that a buyer can beat out other buyers.

Topics: Buying A Business     Tags: buying a business, deal structures



When attempting to purchase a business, it is important to understand that you likely aren t alone. In many cases, there are a number of potential buyers lining up for the chance to acquire a successful business, which can make the process nerve-racking for the average buyer. Buyers must prepare for competition, so that they know how to navigate the buying process and market themselves to the seller.

To start, competitive buyers must realize that some of the most rewarding things in life are often the most challenging as well. Preparing for the most difficult of business transactions will help ease the anxiety and insecurities of a buyer later on. If one is already having such feelings about there being more than just the seller to worry about, they must ask themselves if a business that is drawing no interest from other buyers is truly worth buying. Surely there are businesses that fly under the radar, but considering a business that everyone else wants to buy is a telling sign that you are in the right place.

As you begin the process of buying a small business that has a lot of interested parties, you will want to understand how the owner/seller is operating their process, and determine what is important to them. If you are worried about being the highest bidder, you shouldn't be. The selling price, while important, is going to be coupled with other important features such as deal terms, financing (getting pre-qualified is critical), post-sale terms, and length of time that the whole process will take. When you know what they are looking for, you'll be able to also determine if you are able to meet their needs and requirements, or be able to negotiate an offer attractive enough to make them consider you their ultimate business buyer. Taking the time to get to know your seller will tell you what they are looking for in a deal, and allow you to present a well-rounded reasonable purchase agreement or LOI when the time comes.

From the moment you first introduce yourself to the owner/seller, you are trying to convince them why you are the best candidate to take over their business. The financial and deal terms are important aspects of the process, but a difference in opinion there won't necessarily take you out of the running if you are able to maintain a professional attitude and your composure as a reasonable, motivated business buyer. It is important to remember that you are competing against people (other buyers) because you are marketing yourself just as much as you are marketing your business skills. Nothing will end negotiations quicker than a lack of people skills, unwillingness to find common ground, and a lack of respect. With that being said, it is critical to have a positive attitude, be willing to work together with the seller to make a deal work, and show that you are a genuine person throughout the process of buying a business. If you are able to demonstrate that you are a stand-up individual, you may not only find yourself with a new business, but a seller that is willing to help you transition into the role of a successful business owner as well.

The final area of focus that can help you beat out the competition is having the ability to come prepared and move quickly. The buying process isn't a race, and is a process that requires a lot of hard work, but coming with knowledge of the industry, a plan for obtaining financing (make sure you get professionally pre-qualified by someone who specializes in business purchase financing and work with a long list of potential banks and financial institutions!), and a strong professional team - CPA, Attorney, Finance Specialist, are all ways to speed up the business buying process. An owner/seller doesn't want to wait years to carefully vet a long line of potential buyers, and will appreciate a buyer who knows how the process works, and doesn't have to spend a lot of time working out things that they should have lined up before entering the buying process. You should be able to make and meet timely deadlines that show the business seller you mean business!

Navigating through the buying process when you have a number of (buyer) competitors is a challenging process, but can be made a lot easier if you come prepared, allocate the time to understand the owner/seller, work quickly to close a deal, and market yourself in a professional manner.


As usual, Peter provides exceptionally clear and accurate advice for the prospective business buyer.

A business buyer who has his financing in place prior to making an offer is on the right path.

But there's more. I tell sellers that what matters most is not what they GET for their business sale, but rather what they KEEP from their business sale. If buyers are represented by a business-savvy CPA and attorney, they can often negotiate deal structures that could cost them less money but put more after-tax money in their seller's pocket. Buyers who are open to and proactive about suggesting creative deal structures can often out-maneuver their (buyer) competitors while even paying less for the business.

Another important factor: the buyer should be willing and able to conduct his due diligence in the absolute shortest time possible. If there is delay, let it be caused by the seller, not the buyer. Time kills deals -- and sellers are very leery of the buyer who needs 'to get cousin Vinny, a retired financial advisor, when he's back from vacation, to review the business records in a 'few weeks', or so." The buyer who is professional and prepared, with his professional advisors sitting on the bench ready to be put on the field to get due diligence over quickly, has a definite strategic advantage.


An attractive buyer to a seller is one who can provide a) proof of funds, and b) good/excellent credit score. A competing buyer may offer a higher price, but may have to "find" the money or have so-so credit. A seller may accept a slightly lower purchase price if they feel that the deal has a higher probability of closing, because once the business is in escrow it's basically off the market.

Contributor: Broker/Consultant: Elderly Care Services

Have you ever thought about how buying a business, selling a home or any simple transaction is so very very similar as to participating in a simple game of volleyball or other competition?

Who's on your side of the field, what levels of experience do they have, and what level of interest do they have in seeing you win? These are the questions I would ask myself if I was seeking out a Broker to represent me in the purchase of a business. This would be doubly important to me if I knew this was a "hot" business and that I would most likely be competing against other Buyers.

Do yourself a favor; when looking to buy a business, first find out what kind of Agency Relationship and representation you will be having with your Broker of choice. Have a candid conversation about who is representing whom. Ask what levels of experience and knowledge the Broker has in the particular industry you are seeking.

It sure is a lot easier to "win" if you know your team member has your best interest at heart and has the knowledge, experience and gusto to bring you to the finish line!


  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.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.

Shalonda Chappel: 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.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Elizabeth McGovern: Escrow Services - San Francisco 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.

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.

Janet Carrera: Escrow & Bulk Sale Service - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Back-Up Offers: Crucial When Buying Or Selling A California Small Business

An often overlooked aspect of selling (or buying) a small business is taking back-up offers during the entire process of selling (or buying) a business. Most sellers (or buyers) don't realize that over fifty percent of all deals/contracts fall out escrow or contract for one reason or another.

I am Buying A Business: Should I Buy The Property As Well? A Good Decision?

There are advantages and disadvantages to owning commercial property. Here are a few questions to ask when it comes to deciding whether or not to buy the property along with the business. Peter Siegel, MBA with the BizBen ProSell Program reviews this issue with potential sellers and intermediaries.

What Are Business Buyers Biggest Mistakes? The Pros Examine The Most Common

A business buyer in our ProBuy Program searching to buy a California business asked me to sum up what I though the biggest mistakes business buyers make when they search for and bought a small business. I asked BizBen ProIntermediaries their thoughts on the matter and received a diverse response.

4 Reasons Why Business Brokers Do Not Cooperate With Other Brokers & Agents

Despite challenges in the business for sale marketplace, some of the business brokers who make a living by facilitating a deal between buyer and seller are known to stand in the way of a completed transaction because of some outdated ideas. Too bad they put greed ahead of the needs of their clients.

Business Purchase Financing - 3 Things You Need To Know Now For Success

Looking to buy a small business? There is good news regarding business purchase financing. More financial institutions are coming back into the market with business purchase financing. After years of being selective many lenders are more open to financing deals. Peter Siegel, MBA covers this topic.

Find Out Why 80% Of California Business Buyers Never Find And Buy A Business

First the dreaded statistic: 80% of all CA business buyers looking to buy a business in California never end up doing so! Peter Siegel, MBA BizBen.com Founder & ProBuy Director) covers successful tactics & strategies all business buyers of California small to mid-sized businesses should utilize now.

What Factors Are Considered In Valuing A Small Business? Advisors Weigh In

Valuing a small business is not guess work. It's not what some other businesses of the same type may have or may not have been sold for, it's not even what a business owner "feels" they want or deserve. It is a formula based on many factors. Peter Siegel, MBA from BizBen & others discuss this topic.

Considering Hiring A Business Broker? Ask These Questions First, Then Decide

The key to finding the ideal business broker or agent and selling a small business is asking the right questions and getting the right answers back! Peter Siegel, MBA with BizBen & several top business brokers and agents in California (ProIntermediaries) contribute to this topic to assist sellers.


Tim Cunha Business Brokerage
Escrow Services Diane Boudreau-Tschetter
Julieanna Wakileh Preschool Broker
Sacramento Area Laundromat Selling
Facebook
Twitter
Linkedin
Vlogs and Podcasts
California Educational Events Buying And Selling Businesses
BizBen ProSell Program
Instant Email Alerts On BizBen
Advertise On BizBen
BizBen ProBuy Program


BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2020, All Rights Reserved



Clost Login


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Thinking Of Selling My Business: What Factors Create Value And Drive Pri...
Read More News
Selling Your Business To One Of Your Employees - A Good Idea? Pros And C...
Read More News