When you are considering buying a business, many business buyers waste an inordinate amount of time beating around the bush. They spend countless hours searching business listings, calling multiple brokers, signing dozens and dozens of non-disclosure agreements only to never get to their ultimate goal of actually buying a business.
Business sellers and business brokers see these kinds of buyers all the time. While deep down this type of buyer might be serious about owning a business, they will not be taken seriously by those in the market or those in the industry because no one wants to waste valuable time on a buyer who is only “kicking tires”. As a buyer you have to show how serious you are about purchasing a business as soon as you have found the right business for you.
What if I am “kicking tires” because I’m not sure this is the business for me?
You will have to realize something about the business market right away – there is no perfect business. All businesses come with their fair share of issues, you will just have to decide what you will (and won’t) be able to deal with.
How do I find out if the business has issues I can deal with?
Make an offer. This is the best way to pull back the curtains and really decide if this is the business for you. In many cases, the seller will refuse to release any confidential financial information until an offer is made.
What happens after you’ve made an offer that is accepted by the seller is a period called due diligence. During due diligence, the business is temporarily pulled from the market to allow you as the buyer to have a good look at the financial records, the inventory, the equipment, etc.
If, during this due diligence period, you find out that the business has issues you can’t handle, has problems that you didn’t see from the outset, or you simply decide that the business is not for you – you can back out of the deal and move on.
As a buyer, you can’t be afraid to get the ball rolling. Make offers on businesses you are interested in. If a full-fledged offer makes you too nervous, you can even go in with a Letter of Intent (LOI). The point is the only way to be taken seriously by a seller is to put an offer in writing.
Are you a buyer in the market, but are having trouble getting sellers and brokers to take you seriously? Do you have questions about how to put in an offer on a business? Please leave us a comment or question here, and we will be happy to help.