What information about the business can you share before signing a confidentiality agreement?

Owners are cautious about sensitive business information being shared broadly without a confidentiality agreement (also known as a non-disclosure agreement or NDA) in place. Before signing an NDA, we can only share the key points about the business without specifically identifying which business it is. For the most part, we try to include as much of this information as possible in the listing.

You are welcome to schedule a call to ask questions before signing the NDA and we will do our best to answer them while respecting the confidentiality of the seller.

What confidential information about the business will I get access to?

For each listing, we’ll securely share all of the key information that you need to evaluate the business. There are two levels of access we provide to prospective buyers.

After signing a confidentiality agreement but before signing a Letter of Intent (LOI), we share access to a confidential information packet, bookkeeping reports (e.g., Profit and Loss Statement, Balance Sheet), anonymized customer lists, and equipment lists. After a buyer signs an LOI, we then provide access to full customer lists, tax returns, and bookkeeping reports.

What is a confidential information packet?

We create a confidential information memorandum for each listing which outlines all of the key details you need to evaluate the business at a high level. The following is a list of the type of information typically included: business history, financial overview, locations and facilities, services, operations summary, employees, customer segmentation, marketing, business analysis, growth opportunities, reason for selling, transition period, deal allocation, ideal buyer profile, and photographs.

How frequently are buyers given access to review the confidential business documents?

A vast majority of buyers who complete the introductory call, set up their profile and sign the confidentiality agreement are granted access to the confidential business documents. Given the sensitivity of the information, sellers want to ensure it is shared with qualified and serious buyers.

Why should I buy an established business?

The challenges of owning a business are immense. Getting started right with an established business will save you time and money. The benefits of buying an established business range from an existing customer base and known location to advance knowledge of how the business has performed. Contrast this with the high risks of start-up businesses where the difficulties of unknown location and product mix result in an average three year failure rate of more than 75%.

Are profitable businesses for sale?

There are always a number of good, profitable businesses for sale. Retirement, illness, death, partnership disputes, relocation and simple “burn-out” often cause business owners to sell financially sound businesses. With an established business, you gain the advantages of ownership with two of the benefits required for all successful businesses already built-in; good location and a proven product or service. The third ingredient for success is management, and that’s where you must make the business work. With an established business, you have the benefits of a proven track record, employees, supplies, identification as well as the customers.

What are the rewards?

In addition to the challenges of good business management, come many rewards. High on the list is the benefit of controlling your own financial and career destiny. You decide how money is spent; when to work; how the business should be run; and how to keep it growing. In return you achieve job security, financial independence, and a great deal of satisfaction from your increased self reliance.

When do the financial benefits begin?

Immediately! When you buy a business from the previous owner you gain financial advantages right from the start. Your down payment becomes your only real investment because all other costs of the purchase are usually paid by the business through cash flow. In effect, the business buys itself. Unlike borrowing from a bank, typical advantages of seller financing include lower down payment, lower interest rates, and simplified credit checks. Add this to the tax benefits of owning your own business and the purchase of an existing business becomes a very positive move.

How does the buying process work?

After discussing the type of business you are interested in with your representative, you’ll be qualified as to your ability to buy one of the businesses listed for sale with us. When you find a business that looks interesting, you will tour the business and can determine for yourself if it feels right for you. If it feels right you are then free to make an offer with all the protections and contingencies that you feel are prudent. You are in control of the offer so that your satisfaction and protection are in your own hands.

What are the key motivators for people going into business for themselves?

There are many motivating factors why people choose to go into business for themselves. But the ones that come up most often are the following:

• Do my own thing, control my own destiny
• Don’t want to work for someone else
• Better use of my skills and talents
• Make money

While money is a key motivator, it’s important to realize it may not always be the top factors.

Why should I buy a business instead of starting a business?

An existing business has a track record. The failure rate in small business is largely in the start-up phase. The existing small business for sale has demonstrated that there is a need for that product or service. Financial records are available along with other information on the business.  Most sellers will stay and train a new owner and some will also supply financing. Finding someone who will teach you the intricacies of running a business and who is also willing to finance part of the sale can make all the difference to your success.

What should I be looking for in a business?

You want to consider only those businesses for sale that you would feel comfortable owning and operating. “Pride of Ownership” is an important ingredient for success. You also want to consider only those businesses for sale that you can afford with the cash you have available. In addition, the business you buy must be able to supply you with enough income – after making payments on it – to pay your bills. However, you should look at a business for sale with an eye toward what you can do with it – how you can improve it and make it more productive and profitable. There is an old adage advising that you shouldn’t buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner comes in and does just that. Conversely, there are also cases where a new owner takes over a very successful business eventually after, it either closes or is sold. It all depends on you!

When should I get started looking for a business?

You should start looking for a business as soon as you are positive that becoming a business owner is what you want to do.  There are several factors that are involved in being able to buy a business including your personal financial statement, cash available for a down payment, personal credit history, work history and experience and overall motivation. But if you are confident that this is a step you are ready to take and have the ability to execute once you find a business, then now is the best time to start.  It can take anywhere from a few months to 2 years to find the business that fits most of your criteria.  And solid business opportunities don’t last on the market for long.  The sooner you start looking, the sooner you can find your business.

How long will it take to find a business?

Every business search is different.  No one can tell you exactly how long it will take to find a business, but it can take anywhere from a few months to a few years.  A lot depends on the search criteria,  industry, and geography that you are searching.  Also having the ability to quickly analyze a deal and act plays a major part in how long it takes.  Solid businesses don’t last on the market long. And more experienced investors often have the resources to move on a deal quickly.

When should I hire attorneys and other advisors?

It may be advisable to have an attorney review the legal documents. It is important, however, that the attorney you hire is familiar with the process of buying a business and has the time available to handle the paperwork on a timely basis. If the attorney does not have experience in handling business sales, you may be paying for the attorney’s education. Most business brokers have lists of attorneys who are familiar with the business buying process. An experienced attorney can be of real assistance in making sure that all of the details are handled properly. Business brokers are not qualified to give legal advice.

However, keep in mind that many attorneys are not qualified to give business advice. Your attorney will be, and should be, looking after your interests; however, you need to remember that the seller’s interests must also be considered. If the attorney goes too far in trying to protect your interests, the seller’s attorney will instruct his or her client not to proceed. The transaction must be fair for all parties. The attorney works for you, and you must have a say in how everything is done.

An experienced business broker can recommend a qualified attorney as well as other advisors you may need along the way.

What steps can I take to avoid or reduce the risk of buying a business?

There will always be some risk associated with buying a business.  But there are ways to reduce your risk as much as possible. The key is research. Your goal is to know as much as possible about the business and the people in that business. Having a person who understands the due diligence process and all the rocks to look under can greatly reduce your overall risk.  Being able to verify all the assumptions made throughout the process and check the financials against the tax returns can give you and understanding and comfort level with what is going on with the business.  Understanding the industry should give you a comfort level with what is going on outside of the business.

Why do I have to sign a confidentiality agreement?

Sellers are very concerned about confidentiality because of fear of losing customers, losing employees, general uncertainty and actions taken by competitors. Therefore, as a potential buyer, you must treat confidentiality seriously.  Buyers should not talk to employees, clients, suppliers, or competitors without written approval from the seller.  Maintaining confidentiality is also advantageous to the buyer because a smooth transition without problems is good for business.

I’ve found a business to buy and want to get an opinion of Value?

Second opinions are always a good idea, not just in this context, but in life. We offer an “Opinion of Value” as a service to Buyers who just need to know the price their contemplating is reasonable or maybe not.

Why is the owner selling their business?

Owners sell their businesses for many reasons, but the most common are:

• Retirement
• Burnout
• Health or medical reasons
• Partnership Split
• Relocation
• Lack of capital to grow or maintain the business
• Distance from home
• Location or lease terms
• The realization that they’re a poor fit to operate the business and want to see it successful in other hands.