Business Buying | About the Buying Process

Business Buying | About the Buying Process

Buying a business is a tedious process and also involves serious research on the buyer’s part. It is a huge decision for a buyer to make for it entails a huge amount of money at risk.

The process of acquisition is quite complicated for most of us and we do not understand some of the process involved. So if you are new in this field, you might want to tap a broker to help you out. However, you must remember that most brokers are hired by sellers to work for them so be careful in choosing one.

What does a broker do?

A business broker typically acts as the middle man between the seller and buyer. They help in the transfer of ownership from seller to buyer. The broker’s main role is to guide buyers by giving out all essential information needed in the purchase of the business.

They can assist buyers in many ways including:

• Information – they can help in providing research and information for the buyer that is essential for a decision.
• Lay out facts – presentation of relevant facts about the business.
• Bridge of communication/negotiation – they are the passage of information between the seller and buyer, facilitating in the communication and negotiation process.
• Identify your interest – By determining what your interests are, brokers can help you to decide on what kind of business will suit you.
• Aid in handling paperwork – As you know, the buying process is a complicated process which involves a great deal of paperwork. Brokers assist you on the policies and laws governing the purchase.

The purchase process involves the following:

• Know what your investment objectives are
• Business valuing
• Seeking right opportunities
• Thorough examination of the business before acquisition
• Supervising and negotiating the purchase
• And closing the contract

Steps in the buying process with involvement of a business broker:

1. Meeting between buyer and broker wherein broker assists in deciding on what type of business.

2. Confidential information will be kept in private by buyer in order to protect seller’s interests.

3. Detailed facts are presented by the broker to the buyer.

4. When a buyer has chosen a number of businesses to select, he or she then visits the premises of each business with the broker.

5. Buyer now decides and selects the business to be acquired.

6. A Purchase Offer in writing will be made by the buyer with the assistance of the business broker. A Purchase offer would include the following:

- Statement of intention to buy
- Amount of money to be paid and payment terms
- Inclusion of a non-compete clause, which prohibits opening a competing business near the premises at a given period.
- Request for information and documentation of the business to be purchased.
- Indicated in it is the purchasing of the business in good faith.
- The Purchase offer is still for further review and not yet binding.

7. Presentation of the established Purchase offer by the broker to the seller.

8. Acceptance of Purchase offer by the seller with signature affixed on the contract.

9. An escrow account will be opened consisting of the down payment for the acquisition of the business.

10. Thorough investigation of the business done by the buyer.

11. A final draft of the Purchase offer contract will be made with the aid of a lawyer which and a notary.

12. Final fixed selling price is established by both buyer and seller.

13. Determination of whether there will be retention of staff.

14. Pending debts will be paid by the seller that is not covered in the purchase offer by buyer.

15. Signing of the final purchase offer in the presence of a notary with the full payment paid to the seller.

16. Seller turns over the business to the buyer.

Legal considerations involved in purchasing

There are many legal considerations that need to be taken into account. Find out everything about the business you are going to buy. Know and learn about your responsibilities associated with the acquisition.

Along with the legal considerations, there are also legal costs accompanied with the purchase and it will depend on how complicated the transaction and amount of work needed.