September 2021 - Infinity Business Brokers

Buying A Business? Don’t Sign A Million NDAs (Do This Instead)

Published September 27, 2021

If you’re excited about buying a business it might be tempting to spend your days scouring the internet for business listings and then requesting information on everything that even slightly matches what you’re looking for.

Don’t do that. Here’s why:

Businesses are bought and sold under a veil of confidentiality. That confidentiality exists to protect the business while it is being sold (you can read more about why here). What this means for you as a buyer is you can’t just look up a listing and immediately get all of the information on a business for sale. There’s a layer of legal protection that you need to get past before you can gain access to the information you need. That layer involves signing a non-disclosure agreement (NDA).

Signing the NDA means you can’t disclose the name of a business, the location of a business, any proprietary information you will now have access to – even the for-sale status of a business. You will have to sign a NDA for each business listing individually. If the business brokers involved are doing their job, you shouldn’t be able to sign the NDA until you’ve had a conversation about why this business fits with your goals for business ownership and if you actually have the funds necessary to make a sale happen. The importance of keeping the for-sale status of a business under wraps means a broker should only be allowing NDAs to be signed by potential buyers who could actually be buyers – not hundreds of random tire-kickers.

The necessity of confidentiality might initially seem frustrating as a buyer, but it’s not just the business itself this process helps. As a buyer, you don’t need to be wasting your time signing dozens and dozens of NDAs for businesses that would never have suited you in the first place. It’s a colossal waste of your own time and energy.

Here’s what you should do instead. Call a few business brokers. Have conversations with them about what you hope to get out of business ownership. Talk to them honestly about the amount of funds you have available for your new venture. See if you think you and a broker would work well together.

This initial conversation will help a good broker find listings that will actually check all of your boxes. Then you can efficiently sign NDAs for businesses that may work for you.

A very important note here. Once you have a broker you like – don’t go and sign NDAs on any listings without them. Once you’ve signed another broker’s NDA your broker can’t help you anymore. NDAs are tied to specific businesses, and are therefore tied to the listing and the listing broker. Your broker can request the NDA on your behalf for a listing that isn’t theirs and still maintain the buyer-broker relationship with you. If you go around your broker and sign a NDA they didn’t request they legally and ethically can’t even give you advice. The relationship has now shifted to whatever broker has the listing – a broker you don’t know and who doesn’t know you.

The message here is although the process of searching for businesses has a few more steps than other big purchases like a house or car – those steps exist to make the process more efficient for everyone – including you. Find yourself a good broker, maintain that relationship by only having your broker request NDAs and be patient with the process.

Are you shopping for businesses and weren’t aware that signing NDAs tied you to listing brokers? Do you have questions about what businesses currently for sale you meet your goals for business ownership? Ask us! Leave any questions or comments and we would be happy to help you on your business search.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

3 Important Points Every Business Buyer Should Know

Published September 20, 2021

Businesses are inherently complicated. You are dealing with staff, vendors, clientele, a location or locations, possibly vehicles, inventory, computer systems and software, operating procedures, leases, licensing requirements, permitting requirements, inspections, certifications – the list goes on.

If you are considering becoming a business owner and entering the world of entrepreneurship by buying an existing business, then the complicated nature of businesses not only includes the business itself but also the process to buy it.

If this is your first time in the business for sale market, then there are a few things about the process you must understand in order to be successful.

This Will Be Nothing Like Buying A House

This one is the biggest misconception. It will cause major problems between you as a buyer and the sellers and business brokers involved if you don’t immediately banish this thought from your mind. You don’t search “businesses for sale” on the internet, see pictures and collect addresses, then drive around with a business broker for tours. That is what you would do if you were buying a house. Businesses for sale keep that fact completely confidential, and as such you can’t call up a business broker and ask him to “show you some businesses”. In the business sale process, there are many more steps. You will first be required to sign non-disclosure agreements, then you will likely have conference calls and/or meetings with the sellers and brokers off-premises long before you get a “tour” of the business. The non-disclosure agreements also mean that you will not be able to tell anyone outside of the transaction what business you are considering buying until after you get to the closing table.

Most “Buyers” Don’t Buy Anything

If you are really serious about buying a business, then you will need to be prepared for the reality that those who are already in the business market – think sellers and brokers – are unlikely to give you the time of day. Sure, you are poised to write a very big check to someone for their business, but the fact is only about 10% of buyers who initially look at businesses actually end up buying one – so the other players in the game will initially have a hard time taking you seriously. What’s important here is not to be offended. If you worked in an industry where only one in ten people who vied for your attention actually followed through, you would be a bit picky about who you chose to spend your time on too. You can pull away from the tire-kicking pack by staying motivated, being honest and upfront about the finances you are intending to invest in a business (particularly with your own business broker) and by making good offers on the businesses you like.

Patience, Patience, Patience

We have all become very accustomed to instant communication and instant gratification in our technological world, but the complexity of businesses means you can’t get or do everything you want immediately. You can’t show up on a Thursday and expect your broker to be able to line up three or four businesses for you to “see” on Friday. When you request information from sellers, you need to be aware that in addition to dealing with you they are also trying to run a business, so it may take them a few days to get things back to you. You are (one would hope) not your broker’s only client, so if they don’t answer the phone or immediately return your call it doesn’t mean that they are blowing you off. When you send financial records off to a CPA or contracts off to an attorney to be reviewed, you will have to give it some time to get those documents back. If you are dealing with licensing and permitting issues, you need to be aware that government agencies are not known for their speed. Just be patient with the process and everything should fall into place.

If you really want to buy a business know that with a good dose of patience, good offers and the understanding from the start that this process can be pretty complex, you have a great chance of finding the right business for you.

Are you a buyer who’s had trouble getting anyone to take you seriously? Do you feel like the process couldn’t be any slower? Do you have more questions about confidentiality or any other part of the process? Ask us! Please feel free to leave your comments or questions here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

Why All The Secrecy? Understanding The Confidential Nature Of Business Transactions

Published September 13, 2021

If it’s your first time navigating the business-for-sale marketplace you may have noticed something that sets it apart from almost every other situation where something is for sale. Everything is a carefully guarded secret.

Business listings are vague and don’t disclose the name or location of the business.

Listings are very basic and don’t give you much in the way of details about a specific business.

When you call on a business, the broker will continue with the vague information unless you are willing to give up some information about yourself (like your name and permanent address) and sign a nondisclosure agreement (NDA).

What gives? How am I supposed to find a business if no one will tell me which businesses are actually for sale?

An existing business can’t be sold like most other things because an existing business exists in a world of powerful misconceptions. Those misconceptions are that a business for sale is a business on the brink of failure. When the average person sees a for-sale sign on a business door, they automatically assume that the business is in dire straits. Why would anyone sell a successful business, right?

Well, there are a lot of reasons. Maybe the current owner is ready to retire or has their heart set on a new life adventure that will mean they can no longer run the business. Perhaps the current owner started or bought this business with a specific set of goals, and now that those goals have been achieved it’s time to move on to another project. Sometimes owners have something occur in their personal lives that will make it difficult to maintain the responsibilities of ownership and so they’d like to leave the business in good shape and go attend to what they need to.

It’s actually relatively rare for a faltering, disaster of a business to be sold. In situations that dire most choose to lock the doors, cut their losses and walk away.

What does that mean for business buyers? Most businesses for sale are great business opportunities.

To remain great opportunities, those businesses need to be protected. Those powerful misconceptions about a business for sale can cause massive problems for an existing business if they simply stick a for-sale sign on the door. The entire staff can panic and quit. Vendors can cancel contracts. Current and prospective customers can choose to do their business elsewhere.

A business is protected throughout the sale process by keeping the for-sale status confidential. The only people who can know the business is for sale are the seller, the brokers involved, prospective buyers and their experts (think attorneys and CPAs) who have signed the appropriate nondisclosure agreement.

What does this means for you as a buyer? You will have to use vague business listings to do a cursory search. When a listing seems to fit with what you’re looking for you will have to give out a tiny bit of information about yourself (that helps to identify you as an individual) before you can be given potentially damaging information about a business on the market – namely it’s status as a business for sale.

Here’s what you can’t do. You can’t change the industry standard NDA to suit your liking. You can’t disclose what businesses you’re looking at to your neighbor or the guy in line with you at the coffee shop. You have to play by the rules that everyone does so businesses can stay in good shape while they are being sold.

Are you considering buying a business and want to know more about the confidentiality of the process? Do you have questions about what signing the NDA means for you? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

4 Considerations: Buying A Business With A Partner

Published September 6, 2021

Owning and operating a small business can be a much easier undertaking if you share the workload and responsibility with a business partner – but that lightening of the load can quickly devolve into a nightmare if you pick the wrong person.

How can you know if you’re making the right choice?

Here’s 4 things to consider:

You’ve known the person long enough for the honeymoon period to have worn off.

If you’ve just met someone who you think would be absolutely perfect to own a business with – tap the brakes. A business partnership is just like any long term relationship – the first bit is all happiness and roses, then after a time real life marches in and true personalities (and flaws) surface. You wouldn’t marry someone after only a handful of meetings, so don’t jump into a business partnership with someone you barely know. If the two of you really think business partnership would be possible in the future, embark on a much smaller project together and let some time pass. If small projects are a success and you are still good to go after a year or so, then perhaps you’ve found the right business partner for you.

You both bring different things to the table.

Two disorganized creative people are not going to be able to run a successful retail store, but one disorganized creative person can bring life to a retail concept while their organized and number-crunching business partner keeps everything on track. Really think about what your strengths and weaknesses are, then find someone who complements those strengths and weaknesses.

You don’t disagree about massive life things.

Just like the marriage of a deeply religious person and an outspoken atheist probably won’t last – you and your business partner need to share some core values if you’re going to be able to coexist in the same space for years on end. This is another reason why you need to spend some decent time together before you sign on any dotted lines. You might find out you have irreconcilable differences of opinion that will hinder any chance of a good partnership.

You’re both willing to enter a strong operating agreement.

Much like a prenup in a marriage, an operating agreement from day one will eliminate any contentious arguments down the road about who is responsible for what, who owns what percentage, what the exit strategy will be, and what your rights are as a partner. If the person you are considering for business partnership either won’t sign an agreement or won’t agree to what you want – they probably won’t be a good partner.

A great business partner can be a blessing, making your life easier by helping with the workload and by complementing what you bring to the table. The alternate possibility, however, is choosing someone who makes your life a living hell. Do some homework and let some time pass. Be just as diligent about choosing a business partner as you would be about choosing a business.

Are you considering buying a business with a partner? Would you like to know more about putting together a strong operating agreement? Ask us! Leave any questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
5111 Ocean Boulevard, Suite E
Siesta Key, FL 34242

www.InfinityBusinessBrokers.com

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242

Buying A Business? Don’t Sign A Million NDAs (Do This Instead)

3 Important Points Every Business Buyer Should Know

If this is your first time in the business for sale market, then there are a few things about the process you must understand in order to be successful.

Why All The Secrecy? Understanding The Confidential Nature Of Business Transactions

4 Considerations: Buying A Business With A Partner

How can you know if you’re making the right choice?

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