Do most people who want to buy a business already know what type of business that they want to acquire?
Actually, no, they don't. Most buyer prospects tell me that they want a "good" business making plenty of money, something not too complicated. Many list a few broad categories such as "construction related" or "manufacturing." Several take the negative approach: "no retail" or "no restaurants." A very few are specific, "I want a dry cleaning plant."
For most buyers, the defining factors are geography and size - they want to buy a business within 1/2 hour from where they live and they have a certain amount of cash available for down payment that defines the price they can afford.
Of those that are attracted to the business broker by a specific listing, 70% of those that actually buy, buy a different business than the one that they were initially attracted by.
What type of information do you need about me?
Your personal and/or business net worth, how much cash is available for a down payment, what geographic location do you prefer and what type of business do you prefer are the top questions that we'll ask.
What kind of information can I get about a business without signing a confidentiality agreement?
You can receive what we call a "blind profile." It gives you just enough information to understand the industry, general area of location and scope of size (price/investment).
Take a look here at what a sample "blind profile" for buying a business entails.
Once you sign a confidentiality agreement, you'll receive detailed information on the business: name, address, management, products, markets and financial performance.
Can you tell me where the business is located?
No, we're sorry, but that's confidential information at the initial stage in buying a business. Once we determine that you qualify and you sign a confidentiality agreement, we'll be happy to share that information as well as the name and the financial details of the business that you're thinking of buying.
Is there a list of questions that a buyer should ask the seller when they meet? As in, "why do you want to sell this business?"
Yes, there is. As a matter of fact, the two most often heard questions are "How did you come up with the price?" and "Why are you selling?"
The good news is that for each business that you want to get more information about, you'll be able to get a Confidential Memorandum that lists the particulars for that business. The Confidential Memorandum is in a question and answer format and addresses the questions that buyers typically ask.
And, for those questions that aren't typical, the best news is that your business broker is going to be reviewing the Confidential Memorandum along with you. Since each business - and each prospective business owner - is different, your business broker can help you identify those specific questions that you need answers to.
As a business broker, do you work for the buyer or the seller?
Almost always I represent the seller, regardless of whether I am the listing broker or I am bringing a buyer to someone else's listing on a co-broker basis. At times I am approached by a sophisticated buyer or company looking for something specific and they simply want me to help them find it, I will work for those buyers to do a search for a fee.
Should the buyer and the seller each have a lawyer to represent them?
Traditionally the buyer would have his attorney draw up the documents and submit them to the seller for his attorney to review and comment. The problem is the buyer's attorney usually draws up a one-side agreement that over-protects the buyer to the peril of the seller, so it takes a lot of effort to get balance and agreement - it goes back and forth several times (making lots of money for the attorneys). For larger transactions this is usually the case.
For smaller transactions, we recommend using an independent attorney (who technically represents the broker) to draft the documents and give them to both the buyer and seller for review.
This is much more efficient (and less expensive for both the buyer and seller) because the documents start out fair and balanced so it is quicker to get agreement.
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When you're serious about buying the right business for your needs, call Lou Pereira at 603.890.6628 or contact us directly via e-mail.
