Things to Consider when Buying a BusinessBusiness Brokers
If you are planning to buy or sell a business, you want to make sure that the process goes as smoothly as possible. We help clients on both sides of the table – buying or selling – and we know how important it is that all aspects of the purchase or sale are managed appropriately. As a business broker we will discuss some important things to remember when buying or selling a business.
Buying a Business Through A Business Broker
Many people choose to buy an existing business, rather than starting one from the ground up. There are several benefits to buying an already established business, such as reputation, customer base, established inventory. There can also be complexities to buying an established business, especially if the business has fallen on hard times.
Here are some important things to remember as you contemplate buying a business and move into the purchase process:
- Why the business is for sale: The reason the current owner is selling is an important factor in your buying process. Is the owner retiring? Is the business underwater or facing bankruptcy? Find out before deciding to buy.
- Explore company history: Check public records or city and county offices for information about the business’s history, such as licenses, permits, previous owners, etc. This is important in making sure the business meets the legal requirements of the city, county, and state.
- Get financial records: Before buying a business, obtain financial records for at least the previous two years of operation. Make sure you obtain records for expenses, cash flow, assets, and liabilities or debts.
- Get an itemized list of sale contents: Before buying a business, get an itemized list of exactly what the sale includes. Take note of things like fixtures, inventory, the business name, trademarks, patents, or intellectual property.
- Price and financing: It is very important to make sure you and the seller have a set, agreed upon price for the business. You will need this bottom line when approaching investors or lenders if needed for financing.
- Smooth transfer: Many businesses find it helpful to work out a smooth transfer of ownership involving both the buyer and seller. This can help prevent a negative impact on the business, employees, or operations. Depending on the type of business, having the input of the previous owner can also help as you learn the ropes of your new venture.
Getting A Business Brokers Help When Buying a Business
When buying a business, there is a lot of research, time, and paperwork involved. Get help with the buying process by contacting a Florida Business Broker today. We can help you get the information you need and manage the buying process so you can be certain your new business is ready to go.
Selling a Business With A Business BrokerA Business Brokers Selling Strategy
When selling a business, there is more involved than just deciding to sell and setting a price. Businesses are more complicated, and there is more involved in the process of prepping your business for sale, and ensuring your sale goes smoothly.
Here are some important things to remember when selling a business with a business broker:
- Asset or entity sale: The first step in selling a business is deciding whether to sell it as an asset or entity sale. An asset sale means you are only selling the assets of the business. An entity sale means you are selling the assets and liabilities of the business as a whole.
- Valuation: The next thing you need to do is get a broker, appraiser, or accountant to determine the value of your business. Understanding the value of the business is an important part of the selling process, and factors into many other steps along the way.
- Organize company documents: As a business owner, you likely have built relationships with vendors, distributors, customers, and other parties. Before selling, it is important to gather and organize all documents related to your business, and your relationships.
- Selling memorandum: This document provides potential buyers with a comprehensive overview of the business – it’s health, value, operations, products and services, etc. The selling memorandum should be available to any serious buyer who signs a confidentiality agreement.
- Terms of purchase: Brokers and potential buyers will often want to negotiate terms of purchase like the price, interest, warranties, or lease terms. You need to be prepared to negotiate and be able to support any counter-offers you make with documentation.
- Inspection period: Serious buyers may present you a letter of intent, and will often want to have the business inspected (documents and physical). This is one part of the process where the valuation and organized company documents is vital.
- The purchase agreement: Once you and a buyer have negotiated terms and are ready to seal the deal, you will need a purchase agreement. The purchase agreement should detail all terms of the transaction, including:
- Buyer and seller names
- Purchase price and form of payment
- Closing date
- Required actions to be completed prior to closing
- Warranties and representations of buyer and seller
- Confidentiality terms
- Legal provisions
- Any additional information or documents required, such as promissory note, stock transfer certificate, company resolutions, bill of sale, etc.
Getting Help From A Business Broker When Selling Your Business
Selling a business can be a challenging process, but when managed properly, is rewarding. Get help prepping your business for sale, drafting documents, or ensuring that your purchase agreement is legal by contacting a business broker today.