For many, the process of purchasing an established business is not a familiar process!
Here are answers to some common questions we hear from buyers.
There are many good reasons to buy an established business.
By purchasing an existing business, the risks associated with starting a brand-new business are dramatically minimized.
There will be no suffering through an extensive start-up period as you struggle to attract customers to your business. You can use the business’ established customer base for immediate cash flow and as your foundation for future business growth.
Successful existing businesses have a proven track record of profits that generally continue long after a business has been sold. As the new owner, you can take the business to even higher profitability by incorporating new ideas, expertise and energy.
A business with a well-known name, location, product mix, knowledgeable employees, etc. will enable you to focus on long range strategic planning rather than day-to-day minutiae.
Another reason existing businesses can be very attractive is that typically you will be able to use the seller’s financing to leverage your buying power. This ensures that you get maximum impact for your investment dollar.
As a new owner, you may be able to negotiate with the previous owner to ensure a smooth transition. Additionally, with seller financing, sellers will want to do everything they can to ensure your success.
Liberty Business Brokers of Ontario is able to draft an offer that will cover all of the pertinent issues (i.e. non-compete agreements, trade name rights, leases, due diligence, etc.) plus any unique conditions that are relevant to your purchase. Our expertise will allow you to concentrate on getting ready to successfully operate your new business.
Buyers need to take an honest inventory of their skills, knowledge and interests. Do you enjoy interacting with the public or are you more content behind a desk? Are you comfortable with managing people and making decisons? What technical skills or talents do you have that could be incorporated into a business?
At this point, don’t be too concerned if you are unable to identify the type of business you are looking for. Normally, most successful buyers know what they’re not interested in, but don’t know exactly what would be attractive to them.
A solid understanding of your financial situation is a key step involved in buying a business. You need to know how much money you are prepared to invest and how much money you would like to make.
The search now begins. Your broker seeks out businesses that match your profile.
When you find one that is of interest, make an offer. This will show your seriousness.
A well written Offer will contain all the language necessary to successfully transfer a business while at the same time containing a number of contingencies that will give you important safeguards.
Once your Offer has been accepted, the next step is to begin your due diligence. There is no point in beginning this until you have reached an agreement with the seller on price, down payment and terms. This is the point where your lawyer will approve the legal language in the Offer and your accountant will verify the financial statements supplied by the seller.
The last step in the process is when your lawyer will complete the necessary paperwork to ensure a smooth transaction. This includes lien searches, government filings, contacting governmental taxing agencies, promissory notes, bills of sale, etc. enabling the ownership of the business to change hands.
Liberty Business Brokers of Ontario are professionals that buyers turn to for assistance in locating and purchasing profitable businesses. With access to many businesses, we can successfully manage the aforementioned steps in buying a business and allow you to make sure that your efforts remain focused on choosing the right business for you.
A professional business broker can be helpful in many ways.
First, sellers who have listed their business with a broker are serious about selling. This eliminates wasted time dealing with owners who are not motivated to sell.
Second, a professional broker will have many different types of businesses for sale, many of which you may not be aware of.
Third, brokers know the information you need to make an informed decision. Brokers maintain up-to-date information, signed and dated by the seller.
For many buyers, the process of purchasing a business is not a familiar process. A broker will be able to help guide you through all the steps and intricate procedures associated with buying a business. This will allow you to concentrate on getting ready to successfully operate your new business.
Professional business brokers will also have checkpoints along the way where you may bring in other advisors to help you analyze contracts and financial data.
At Liberty Business Brokers of Ontario, we believe that an informed client is a satisfied client. We employ numerous procedures that eliminate many of the risks involved in buying a business.
The broker will set up a meeting with the seller once you select a business in which you are interested. This will give you an opportunity to speak candidly with the seller and find answers to your questions.
If you are still interested in purchasing the business after a discussion with the owner, the broker will help you draft an Offer based on the price and terms you feel are appropriate.
The legal language that make up Liberty Business Brokers of Ontario’s Offer is thorough. It has been written and reviewed by transaction attorneys and contains many standard clauses that protect you as a buyer.
In fact, two of the most important clauses in our Offer make the transaction contingent upon your lawyer reviewing the legal language of the Offer and your accountant’s analysis of the seller’s financial statements.
Once these contingencies have been satisfied, Liberty Business Brokers of Ontario will carefully manage the rest of the transaction to make sure that all the conditions of the Offer are satisfied through the closing.