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Steps Involved with Buying Selling a Business

By Scott | October 11, 2010 - 7:39 am |July 18, 2013 business broker florida, buy a business, how to sell a business, Main, sell a business, sell a business florida, selling my business, small business ideas, small business owner

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Buying or Selling a Business is a process. The below provides a framework to define the process and steps needed to buy or sell a business. The size and type of business that one may be buying or selling will influences the complexity of each of these steps.

1) INITIAL INFORMATION REVIEW– Confidentiality and Non-Disclosure Agreements are signed to assure confidentiality related to this private matter. Irreparable harm can occur if the confidential content of discussions and negotiations are improperly disclosed. Seller reserves right to approve potential buyers and may require that additional buyer information/capability be submitted before confidential information is released to the buyer of the business.

2) THE INITIAL MEETING: At the first meeting, the potential buyer of the business will want to know the seller’s motives for selling the company as well as more detailed information about the business and the seller will want to know how if the buyer is the type of person to whom he wants to sell the company. If the results of the initial meeting warrant further consideration of the deal, the buyer will next begin to evaluate the company and develop a financial structure for the proposed business purchase.

3) THE LETTER OF INTENT/PURCHASE CONTRACT: Either a contract with

contingencies or a letter of intent will be presented. A letter of intent may have an ” escape clause” in it to allow one or both parties the opportunity to withdraw from the deal if certain conditions are not met. The letter of intent will address :

The purchase price/ consideration – Selling price of cash, notes, equity, or some combination of these.
What is being purchased — Assets, liabilities, and operations that are being transferred to the buyer and those being retained by the seller should be identified.
Photo (c) webuybusinesses.com.au

Structure — The parties need to agree about whether the sale will be a sale of assets, a sale of stock, a merger, or some other structure. Whether the SBA, bank, or owner takes back a note, the company cash flows must be able to support that loan.
The definitive purchase agreement — As the buyer begins its detailed evaluation of the company, the attorneys will be preparing the purchase agreements. The Sales Purchase contract is usually drafted by the buyer’s attorney.
Due diligence — The seller will need to have ready his financial records, all corporate records,pertinent contracts and all pertinent other documents that the buyer of the business will be requesting for review once the letter of intent or contract is signed. This will allow the buyer of the business to analyze the company in greater depth to determine whether everything has been represented properly, whether he wants to buy the company, and, if so, the appropriate price to pay. A purchase price is usually negotiated based in part on historical financial information. and future potential earnings.
Escrow — The buyer will establish an escrow account into which his initial Good Faith deposit of monies shall be deposited and handled by a 3rd party escrow agent .

Other significant items- non- compete terms, and employment contracts. leases and long-term purchase contracts, and any other pertinent business agreements shall be addressed.

Professional fees – Usually the buyer and seller will bear their own costs for attorneys and accountants.
Conditions and Timing for closing. Usually the closing is within two weeks after all contingencies have been completed, and like most steps in the buying or selling of a business this time is negotiable.

4) CLOSING– Once all issues have been resolved, the documents are signed, and the consideration exchanges hands, the deal is in condition to close. The actual closing marks the conclusion of the process.

Again buying or selling a business is a process and depending upon the size of the business and type of business this process from start to end can take several months or even longer. Due diligence when buying or selling a business is a very important part of this process. Negotiations are made at most every step of the process as new information becomes available and additional analyses are performed.

In a successful negotiation, both the buyer and the seller need to be flexible and to understand which points are important and which ones may be “deal breakers”. Most people may buy or sell a business maybe once in his or hers life. Following the advise of a trusted advisor such as a business broker can help increase the likelihood of a successful business sale or business acquisition.

I’m Looking to Buy a Business

By Scott | September 24, 2010 - 6:26 am |July 19, 2013 business broker florida, buy a business, entrepreneur, how to sell a business, Main, sell a business, sell a business florida, selling my business, small business ideas, small business owner

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“I’m Looking to Buy a Business“. As a business broker based here in Florida this is a statement that I hear often. Within the industry various statistics are stated regarding business buyers. I have heard that 9 out of 10 of those that say they want to buy a business actually don’t buy a business. Based on my experiences that statistic may hold true. There are so many currently employed that during their 40- hour work week aspire to “be their own boss” by starting their own business or buying their own business.

Live Your Dream – Buy A Business

There are many unemployed out there that also think they may want to buy or start a business. So while there are probably as many as millions of those both currently employed or unemployed that aspire to buy a business or start a business, there is a much much smaller subset of those that even attempt to act on those aspirations. Of that small percent that actually act on their dreams and or goals a small percent may contact a business broker such as myself, and a small percentage of that group may find themselves at a closing table signing documents and actually buying a business.

Many business acquisitions are done with out the assistance of a business broker. The numbers of how many entrepreneur types set off to buy a business and successful find a business without the professional assistance of a business broker are unknown to me. I personally had bought several businesses on my own without the assistance of a business broker.

These were strategic acquisitions within a certain industry. I personally feel these types of acquisitions have a higher success rate. Existing relationships, industry knowledge, focus, and synergies provide for a higher success rate. My views on this are based upon a fair amount of first hand experiences of myself and peers. This discussion is based primarily on non- strategic type acquisitions as referred to above.

Photo (c) richardparker.com

Just one of the many steps in the process of buying a business that I assist in is how to apply some focus and some parameters to the basic statement of “I want to buy a Business”. Being my company website is Sell a Business Florida I assume the person contacting me thru my website is looking to buy a business in Florida, but very often many of the other parameters have not been carefully considered.

When one is looking to buy a business criteria can range from looking at a certain specific company, to a certain “type” of business, to “I want to buy A business in the state of Florida”. If you (or someone that you know) are currently employed and want to act on aspirations to buy their own business and gain the feeling of control of ones destiny, or are currently unemployed and view buying a business to be the best means to a gainful career please consider the following.

Things To Consider Before Buying A Business

Below are a few parameters to consider when searching to buy a business. The list can be long and extensive but the below is a starting point that allows the search to buy a business to maintain some focus.

Location- For business purposes and family purposes does the business need to be in a certain State, County, City, or a certain side of town? Or are you looking to buy a home based business that you can operate from most anywhere in the world?
Type of Business- Are you looking to buy a certain type of business like a Landscape Company For Sale or Towing Business For Sale , or are you looking to buy a business that has maintained certain performance levels such as “I want to buy a business that has at least 3 consecutive years of Net Income of $100,000+”.
Are you looking to buy a Hands on or Hands off business.
How much Available Capital to do you have? – This will set a range of businesses that you may consider. Keep in mind that both Available capital for buying a business and Working Capital for running the business should both be considered.
Are you looking for a business that includes real estate
Are you looking for a business that provides Seller Financing?

Prospective Business Buyer– ” Hi Scott I am looking to Buy a Business in Florida” Scott– ” Great, What type of business are you looking to buy” Prospective Business Buyer – “I really don’t know”

Internet Marketing For Dummies- By a Dummy (Business Broker/Business Owner)

By Scott | September 15, 2010 - 11:29 am |July 19, 2013 business broker florida, buy a business, entrepreneur, how to sell a business, Main, sell a business, selling my business, small business ideas, small business owner

Internet Marketing Industry

It seems that there are a lot of Internet marketing experts and this industry appears to

Photo (c) http://dsm-publishing.com/

still be somewhat at the early stages of a rapidly growing industry. As a business broker and business owner, I feel a compelling need to try to “figure this Internet thing out’. Maybe I know more about trying to maximize the Internet than some, but the question of asking a business owner (that is not in the Internet marketing business) if they understand Internet marketing is akin to asking someone if they are a golfer. The average golfer may have a handicap of 20-25, Some golfers shoot at professional levels- 0 handicap, some people have never golfed, some have golfed once or a few times, some golf a lot but are still a 30 handicap (the higher the handicap the worse the score).

I am about a 12 handicap. For Internet marketing maybe I am about a 12 handicap too I dont know. I may know more than some, but know there are a lot more that know a lot more than me. My job involves many discussions with business owners regarding the state of their business as it relates to a potential sale of their business or a possibly buying another business. The questions I have as a business broker are also questions shared by the plumbing contractor, the print shop owner, the restaurant owner, the card shop owner and the small business owners scattered throughout the world.

10 Internet Marketing Observations From a Business Owner / Business Broker:

The Internet today is so different than it was 10 years ago. Ten years ago, so many businesses didn’t have websites. Those that did had these fancy Home pages with lots of “neat stuff”. And the site just sat there. Now-a-days it is known that a lot of that neat stuff gets in the way of search engines. A few years ago it seemed if you didn’t show up on google – you didn’t show up, and then came, Myspace, Facebook, Titter, etc. . I am convinced the internet 10 years from now will greatly different than it is now. Trying to figure out where it is going is the challenge.
To me , I see the value in Social Media marketing is that it decreases my reliance on Google. With Social Media customer have another way to find you. You don’t need to show up on page one of google to be found. I may be wrong with this line of thinking but this is my perspective.
It feels like everyhting I learned yesterday, is almost outdated tomorrow
I see the question asked so often online- Is anybody making any money on Twitter. Twitter is growing at 1,000,000 new users per minute 🙂 doesn’t it just make business sense that some are making profit on Titter- I am not yet, are you?
Is internet marketing another strong way to reach customers, market
Photo (c) vistaphuket.com

and advertise, or is it so much more. As a business owner we know we need to advertise and market. In the past and present we use the Yellow pages, direct mail, radio, maybe TV, trade shows, telemarket, direct sales. Is it proper to view internet marketing as a very strong means of marketing and advertising or view it as so much more. I tend to think to view it as so much more.
Is it true that if you can drive mad traffic to your website you could sell ice cubes to an Eskimo?.
Is blogging better than tweeting, is Facebook better than Twitter. Do I need to post videos to Youtube? How important is SEO, incoming links, adding more friends, social media buttons/widgets?
Is email marketing dieing, improving, necessary, changing, or being somewhat replaced by social media?
How do I do all that I should be doing on the Internet, without having to bear the cost of “sub contracting” that task out and still run my business.
How will we be accessing the Internet down the road and how does that affect my approach. It seems a few short years ago accessing the Internet with ones cell phone was a novelty at best.

I am just a business owner who’s profession as a business broker requires significant marketing efforts. How do you find a business owner that is looking to sell a business. This is a very confidential event. How do you find a business buyer that is looking to buy a landscape company, a Towing company or a Computer Repair shop? My approach is of to try different things.

I Tweet the businesses I have for sale- I get some follow up questions, I blog about my business experiences- it has driven”some traffic” to my site, I am on Facebook- but pretty weak, I am on Linked-In and a few other social/business sites. I personally feel value in writing a blog as it allows me control to provide SEO optimized current content to my site.

I certainly am not in a position to provide well grounded advise on this subject but my major point is- Are you a business owner confused about what you should be doing on the internet? – You are not alone.

Are Todays Job Seekers Tomorrows Business Buyers

By Scott | September 1, 2010 - 10:05 am |July 19, 2013 business broker florida, buy a business, entrepreneur, how to sell a business, Main, sell a business, sell a business florida, selling my business, small business ideas, small business owner

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In Business Acquisition and Sales the “pool” of most future business buyers are currently employed by someone else right now. The same applies for future Entrepreneurs. But what about those currently unemployed?

The job market seems to have an abundance of very qualified people chasing a very limited number of jobs. The number of those unemployed in the US seems like a fairly difficult number to track, but with unemployment in the 9-10% range-depending how you measure or guesstimate it seems that you have well over 10,000,000 (ten million) people unemployed here in the United States. Is owning your own business by either starting a business or buying a business a viable option for those unemployed.

Is Buying A Business The Future For You?

Is buying a business or starting a new business the right career path to all of those seeking to “re-find” a career or just get off the ranks of the unemployed. Buying a business or starting a business is not for everyone, but it can be a very viable option for many. There are the both mindset obstacles to overcome, and finacial battles to be won before one can make the transition from employee or currently unemployed to one that owns and operates their own business.

I personally think overcoming the mindset of “can I do this?” may be the bigger of the 2 obstacles. To over use a saying- “Thinking outside the box”. Personally I feel there seems to be so many that are “trapped” inside the box, that thinking outside the box in this situation can be a life changing situation. I believe that many of those so many qualified individuals that are currently unemployed will consider “going out on their own” and enter the world of entrepreneur by either starting or buying a business.

For example- I am working with a business owner of a small computer service store, assisting him in selling his business. He is very anxious to sell his store as he has plans to move out of state to be near a friend and join him in a business venture there. He recently reduced his price to $65k due to his increased interest in moving on.

Photo (c) lusens.com

He runs a viable one man business, works about 40 hour weeks, and his business is up over 2009 numbers. His “Owner benefit” is approximately $70,000. So are you buying a job that pays you $70,000 a year? Are you buying a career? Are you buying the ability to control your career? It can be a nice situation for the right person.

Sending off resumes, searching the job board, going on job interviews can almost turn into a routine that may seem to have no end.- Is it a comfort zone, is it doing everything you can do to find your next career. I suggest spending a few minutes looking on a website such as mine Florida Businesses For Sale , or maybe some other larger business for sale websites like www.bizbuysell.com or globalbx.com, or possibly look on Flippa.com to see what sort of businesses for sale are out there, or possibly a website, or e commerce site may be available, what are the cost, and is it even a possibility based on ones current situation. I think one should at least allow the concept of buying a business or starting a business to come into the equation. Certainly owning or running a business is not for everyone, but is it for you?

5 Reasons not to consider starting your own business or buying a business. – Or maybe you should…

Money is needed to buy a business or start a business– but do you have any realistic feel of how much it would take.
Ive never bought a business before or started a business before – talk to most all businesses owners that have owned their business for 10+ years and they will also say the same thing.
The economy is doing so bad now, its just the wrong time to try a new venture.- There are many business owners that have and are delaying the sale of their business. A “pent up” demand is being create. The workings of supply and demand show that as supply increase prices reduce.And of course also the choices are more abundant.
Some people are just more prepared to buy a business or start a business. This is true, but are you one of those “some people”. When you talk to long time business owners you learn that all the uncertainty that you may have while making this major decision is completely normal.
My Job Searching is really going well- I think that is great, my decision to “be my own boss” 20 years ago was about controlling my own destiny, perhaps there are different ways to do that.

My profession involves a lot of time talking with business owner regarding their short and long term business plans. Many current business owners feel they need to get their financials/ and Sales back up to a level commensurate to the value they seek from the sale of their business. This is creating somewhat of a pent up supply I also speak to many potential business buyers and understand that everyone’s situation is so different. Available money, family, location, other personal matters all go into the evaluation. Part of my long term planning of my business broker activities does assume that many of todays unemployed will be tomorrows business buyers.

What Does it Really Feel Like to Sell Your Business

By Scott | August 14, 2010 - 12:15 pm |July 19, 2013 business broker florida, buy a business, how to sell a business, Main, sell a business, sell a business florida, selling my business, small business ideas, small business owner

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You are thinking about selling your business. You may have uncertainty, angst, worries, trepidation, fear, unknowns, and sleeplessness nights. I believe you are not alone. My approach as a business broker in Florida is from a perspective of a former long term business owner. I truly feel some of the feelings I experienced as a business owner are very similar or the same of the business owners I work with as a business broker.

While at this stage of my professional life I am “sitting on the other side of the desk” I feel I do understand the concerns, fears, thoughts of the person on the other side of the desk. There are many qualified experienced business brokers that are not former business owners and these quality brokers bring various valuable perspectives and experiences that benefit their clients. My choice to pursue my “2nd career” as a business broker comes from my recognition as a business owner of the value a business broker can bring.

Should You Sell Your Business?

If I sell my business Do I have enough to retire?
What will I do after I sell my business.?
What will happen to my employees?
What will I sell my business for? Is it enough?
How do I handle all the “little situations” that are part of most any business prior to selling my business?

Does the business owner considering the sale of their business that they were involved from the beginning/day one of the business differ from business owners that had bought an existing business?- Of this I am not sure but somewhat curious if there is a difference.

While it is awkward for me to share personal thoughts in such a public forum, possibly some of my experiences may help others in this very important decision. Some of my thoughts and experiences:

I had felt that the decision to sell my business was equally as difficult as the
Photo (c) mabusinessbrokers.com

process of trying to sell the business. But selling a business is a difficult process.
I had made the decision that if I wanted to sell the business that I would do it under my timeframe, (and when I was mentally ready to sell my business) and not wait until a situation or market or business conditions forced me to sell the business. This decision may have had me miss an opportunity to sell at a higher multiple in the late 1990’s when acquisition values where higher inside my industry, but mentally I was not ready to sell at that point.
My CPA (accountant) that was a very close advisor to me would always say regarding the sale of the business- “You will know when you are ready”. I believe in this statement and it did apply to me.
While going thru the process of selling the business, I always ran the business as if the deal would not consummate. I dont believe you ever really know a sale will occur until signatures are had at the closing table. Even at the closing table on late Friday afternoon, I was still thinking of things I would need to be doing Monday as if I were to remain the business owner. Habits are hard to break and it seemed prudent.
Maybe the proceeds from the sale of your business will allow you to comfortably retire and do nothing. Maybe the sale of your business will give you a little extra cash to save or spend on something you want. Maybe you dont know if the proceeds from the sale of your business is enough “to retire on”, but possibly its enough to allow you to choose an activity, 2nd career, or even work for someone else without the need to solely rely on this decision as your sole source of income. This can be a very comfortable position.

Take My Advice If You Decide To Sell Your Business

I have shared with a few others that after the sale of my business of 20 years I experienced a feeling that was very foreign to me that caught me by surprise, and is kind of difficult to describe. When my business was sold what I was really selling was my responsibility. As all business owners know- you are responsible for everything. If an employee makes a mistake at work, it is your responsibility. If sales goes down, it is your responsibility. If expenses, taxes, fees, regulations increase it is your responsibility. After the sale of the business while on the airplane flying home I experienced a difference that almost seemed inside me at a “cellular level”.

The concerns I had for my 20 plus employees and 5000+ customers that I carried with me for 20 years were gone. I felt I had done my due diligence, worked closely with my CPA , attorney and advisors, found the right buyer to address my goals as a seller and I was leaving my former employees, customers, and responsibilities in good hands. I certainly did not absolve myself of all my responsibilities, and recognized problems could still surface, but I did experience a feeling I hadn’t had in 20 years.

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