Whether you are an Individual, Strategic Buyer, Investor or Private Equity Firm – buying a business is a monumental event with both risks and potential rewards. Ultimately, the keys to success will include:
- A clear and detailed understanding of the business to be acquired and the related risks,
- An honest assessment of your own background, skills and temperament to buy, operate or manage the business, and
- Make sure you have the financial resources to both buy and operate the business.
Venture Investors Business Sales and Acquisitions supports Buyers in several scenarios:
- Business That We Exclusively Represent For Sale (i.e. Our Listings): We will provide information to qualified Buyers on business that we represent for sale, and may represent a Buyer, as a dual agent.
- Co-Brokering: We will work with Buyers indirectly – when represented by their own broker, pursuing a business that we represent for sale. As a matter of policy, we will co-broker, that is, work with any properly licensed broker who bring a qualified Buyer to a business that we represent for sale.
- Buyer Representation: We will work with Buyers, in the role of a “Buyer’s Representative” in searching for and evaluating business already on the market / for sale represented by other brokers or the Sellers themselves.
- Engaged Searches: We will conduct “engaged searches” – identifying and approaching businesses that meet a Buyer’s merger or acquisition criteria that are not on the market / for sale.
Searching for a business to purchase can be a time consuming and frustrating process. Keep in mind that the Sellers usually desire to keep the fact that their business is for sale confidential. So, the ads online will rarely include the name of the business, specifically where it is located or any more than a basic description and a few summary financial figures. In order to get more information you will need to contact the agent, or owner for each opportunity then complete a Non-Disclosure Agreement (NDA) and background information.
A simpler approach will be to work with a single agent (i.e. Venture Investors Business Sales and Acquisitions!) – representing you as the Buyer. A single NDA will generally work, and we will scour the market and get the details of appropriate businesses for you. The downside to this is that a number of Seller’s brokers will not work with Buyer’s brokers – because they do not wish to split the fees. In this case you will need to decide whether to pay us a fee or work with the Seller’s broker.
The Buying Process
- Interest in a Business that we represent for sale
- Upon receipt of your inquiry we will provide a Confidentiality Agreement (NDA) and a Profile, asking that you provide a bit of information about yourself.
- Do not modify the NDA.
- Be as complete as possible on your Background Statement. Consider the Seller’s perspective – you are asking for detailed information about a business, including staffing, marketing approach and financial statements, all of which – including the fact that the business is for sale are extremely confidential and could harm the business if it were to fall into the hands of competitors, clients or employees. Accordingly, we will only release information to respondents that have applicable experience and the financial resources to complete the transaction. In many cases, the Sellers will insist on reviewing the respondent’s profiles themselves before approving the release of information.
- Upon receipt and verification of the above, we will provide a Business Profile, which will include the name of the business, the address, general description of its operations and financial statements.
- DO NOT contact the Seller or employees directly. All communication is to be through the broker.
- Generate questions about the business. FYI – we will rarely take a potential Buyer seriously if they do not ask pertinent questions before asking to see the business.
- Request a conference call with the owner / Seller or to visit the business.
- After a visit, and perhaps more Q&A be prepared to make a formal offer in the form of a Purchase Agreement. This Agreement will define all of the parameters of the sale.
- This will often seem premature, but an offer will have contingencies such as successful completion of due diligence, obtaining a lease and financing. Due diligence is your real opportunity to get inside the business. It is the process where a Buyer has the opportunity to ask and/or review anything they wish to know or see about the business. Due diligence will last for an agreed amount of time and will end one of 3 ways: (1) the Buyer will decide the business is not for them and will be able to walk away from the transaction with no cost or liability, (2) based upon some findings, or better understanding of the business, the Buyer may wish to re-negotiate the pricing, subject to agreement with the Seller, or (3) everything is OK and the Buyer is ready to proceed.
- Escrow will be opened.
- Apply for financing as applicable.
- Once escrow has completed their tasks, a new lease or assignment is in place and financing has been funded – the transaction can close.
- At closing – the Buyer receives a Bill of Sale and the Seller gets their money.
- Assisting Buyers in Finding a Business to Purchase
As indicated above, Venture Investors Business Sales and Acquisitions will assist Buyers in their search for a business to purchase. In fact, we have a practice specialty of representing Buyers known as “Buyer’s Representation” or “Buyer’s Rep.”There is usually no fee for this service, as our fee is paid by the Seller through a co-broker arrangement with the Seller’s agent.
It is usually helpful if a potential Buyer spends some time reviewing the for sale listings on the online marketplaces. Good in that it will give you an idea of what you might want and the scope of what’s available. Bad in that there is actually little information shown in the ads and so many businesses will look interesting that it will be overwhelming.
If you are interested in having Venture Investors Business Sales and Acquisitions represent you in your purchase, DO NOT seek additional information on a business you see online and sign an NDA with another broker. Call us!
Once you have searched a bit, take stock of your skills and interests, geographic preference and finances.
- As a first step, we will help you develop a concise profile of what you want – in terms of industry, size of business, acceptable location, cost and anything else that’s important to you.
- Our Broker will scour the “for sale” market and contact the Seller or broker of all that appear to meet your criteria.
- We will provide you with details of the businesses that we find as well as our perspective on pros and cons.
- We will funnel your questions to the Seller, and/or arrange calls and visits.
- Once you’re ready to make an offer we will draft the Purchase Agreement for you, and submit.
- We will negotiate pricing and terms for you, direct you to financing sources, assist with due diligence and escrow and manage the closing process.
- Engaged Searches – Assisting Buyers Purchase Businesses Not Listed For Sale
Strategic Buyers seeking an acquisition generally have a very clear picture of what they’re looking to acquire, perhaps even specific firms. In an engaged search we will contact specifically targeted firms, as well as other firms that appear to meet the acquisition criteria – even though they are not for sale.In this type of engagement, we will enter into an Agreement and receive compensation for our search efforts, as well as the ultimate purchase transaction.
Contact us for more information.
- Realities of the Buying Process
- There is no such thing as the perfect business, as there are always “issues” of some degree.
- Stick with industries in which you have experience. Lenders will rarely finance a Buyer without applicable industry or general management experience.
- Don’t ask the Broker “Is this their best price?” Or how low will the Seller go?” A broker has a fiduciary obligation to the Seller – not to indicate that they will take a lower price. We recommend that Buyers make offers based upon what they feel the business is worth to them.
- Be prepared to make an offer based upon the information presented. Although that information might be incomplete or incorrect, once a price has been agreed upon and a Purchase Agreement is in place a Buyer will have the opportunity to review the details in due diligence and revise the Agreement as appropriate, or even cancel without any costs.