If you are
buying a business, there will be many questions that will need to be answered
before we begin. What kind of business am I looking for? How much money will
I put down? What is the "right business" for me?
This section will give you some basic guidelines
and answers to these questions. We will show you what to expect when buying a
We will also show you how American Business Brokers
will guide you through this exciting process. Please understand that there is
no charge to you for this service.
- The Initial Meeting with American Business Brokers
- Before American Business Brokers 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, we are looking
for a minimum of 20% down with finances 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. A basic financial statement will help
us determine your purchase power.
- When do I want to buy?
- The broker that 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
is fun for you. If you are going to work hard, make sure you enjoy what you do.
- 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.
It may cause employees of a business to leave or competitors to use it to their
advantage. It may even cause customers to leave if they hear of the sale before
they meet the new owner. American Business Brokers has a fiduciary responsibility
to our sellers to only show businesses to those buyers that will abide by the
- The Education
- We will then take you through an education process to explain pricing, terms,
cash flow, the process, what to expect and how to make the right decision.
- Show you the Businesses
- We will then begin discussing the businesses that match your criteria and
begin showing you these businesses.
- Viewing the Businesses
- Now you are ready to start viewing the businesses we are offering. There
are two ways you will do this. Either setting an appointment with the seller
to meet face to face or on your own.
Meeting between seller, buyer and American Business Brokers. This is how we will
handle most of our meetings. What you are trying to accomplish at this initial
meeting is: Do you like the business? What you can do to improve the businesses?
Information on the staff and the business.
- Viewing the business on your own
- American Business Brokers may ask you to view the business on your own. You
may go with your spouse or a friend. You will go in as a customer, order something,
and just 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 American Business broker has set up an
official meeting with the seller.
Once you find the businesses you are interested in we will begin speaking with
the sellers regarding the finances and other company information. Once you narrow
your search you will move to the Purchase Offer.
- What to Expect
- Before we get to the Purchase Offer, we will answer a few questions and speak
Am I looking for the perfect business? There is no perfect business.
If the business was perfect then most likely the seller would never sell.
If you did find a business that was perfect you would be paying a very handsome
price for it. Your opportunity as a buyer of a business is to see the weaknesses
of your new business and determine how you can make the business better if you
don’t see that right away, you probably won’t ever see it.
- What about financing?
- Many businesses sell with some owners terms, meaning - the seller will finance
part of the business. This will usually entail putting 30% to 50% down on the
business. If not, then American Business Brokers has many lenders that can work
with you to get you financed. Your American Business broker will use their expertise
to come up with creative finance terms that will satisfy both buyer and seller.
- How does my attorney and accountant come into play?
- We suggest that you have an accountant and an attorney. However, they are
not in any position to tell you to buy this business or not.
The accountant will be looking for the perfect business in the financials and
the attorney will be looking for the perfect business in the paperwork. Remember,
that the perfect business does not exist. If you need guidance in your decision
we suggest a friend who has bought or owns a successful business who knows what
they are talking about.
- Will the business generate income to pay the debt and leave you enough to
make a living?
- If not, the business may still be a good takeover candidate.
- Price of the Business
- So how do you determine the right price to ask for the business? We have
a simple formula to help with this. Go to the next heading.
- The formula? Imagine a triangle with three equal sides.
- Each corner has a label. The labels are Price, Terms, and Cash Flow. The
triangle represents "The Deal" or the potential purchase. The deal
can stand as long as it is standing on two of the three sides.
If the price of the business is high, then the seller must be willing to offer
good financial terms and must be making good money. If the business is not making
good money then it must have a good price and good financial terms. Remember,
a good deal has to benefit both buyer and seller.
Finally, are you comfortable with the price?
- Other questions to ask yourself
- • Does Seller Have Provable Books and Records
• Are the terms reasonable?
• Living Wage - Can I make a living and pay for the business?
• Are furniture, fixtures and equipment included?
• Is the building leased? What are the lease terms?
• Will the current owner be available for training if necessary?
• What is the general appearance and condition of the building and assets?
• Will I want the owner to sign a non-compete covenant?
• Why is the owner selling?
• Is now the right time to buy?
- The Purchase Offer - Now you are ready to make on offer on the business!
- American Business Brokers has all of the contracts you need to help you
with this. You will put in the terms, conditions (if any), and offering price.
You will also need to be prepared to attach an earnest deposit with the offer,
which is a small fraction of the down payment.
Your American Business broker will then take the signed offer with the deposit
to the seller. If the seller signs the offer, you have just bought a business.
We will then prepare the closing date and American Business Brokers will guide
you on finalizing the process.
- The closing usually takes place within 4 to 6 weeks.
- It is understandable that you would want to get the business for a good deal,
but offering too low and playing the offer back and forth will only kill the
Eventually the seller will be tired of it and ask us not to allow you to make
any more offers. Ask for a price that is fair for both parties.
American Business Brokers
Business Brokers - Mergers & Acquisitions
Businesses for Sale - Business Consulting
Franchise Opportunities - Business Valuations
Phone: 888-800-6898 Fax: 305-574-0173
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