You’ve been going to your friend’s bar for years. You even helped him paint the bar top when he first opened. Now he’s ready to sell and you think you’d like to buy.
Buying a business usually requires the assistance of an experienced and qualified business broker because business transactions are inherently tough. The process of buying and selling a business is complicated. Lengthy and detailed purchase contracts need to be negotiated, commercial landlords and property managers need to be negotiated with, licenses and permits need to be obtained – the list goes on and on.
Owning your buddy’s bar might fit with your goals for business ownership and you might be able to afford his reasonable asking price – so you might think that there’s no need to enlist professional help to get the deal done. Just a handshake between friends should suffice, right?
While going it alone might seem like a good idea because it’s just a transaction between friends – you don‘t want to end up in a situation where your friendship is lost over the complications that always arise in a business sale. Complications will absolutely, positively happen. You can not avoid them. Using a business broker for your transaction will give the two of you as friends a buffer when those complications come up and will allow both sides to get what they need when they need it.
Many first-time business buyers and sellers don’t understand all of the nuances and important details that need to be addressed in the purchase of a business. For example, you don’t want to write your friend a huge check only to find out too late that the landlord of the commercial space refuses to transfer the bar’s lease to you as a new tenant. There are a million things that can (and maybe will) go wrong. Having someone involved who has been through the process many times will be essential for success.
You also should include a business broker if any seller financing is going to be involved. Seller financing is essentially a loan, and in this case a substantial loan from a friend. Friendships have been lost over far less – so using a business broker to help with the seller financing portion of your purchase contract will ensure everyone knows upfront what is expected and what the ramifications are for reneging on the deal.
Money and business shouldn’t come between friends, so enlisting the help of an experienced and qualified business broker will ensure that the friendship can outlast the business transaction. Mixing your personal and business life requires everyone to be upfront, honest and on the same page. It also helps to have a buffer should anything go sideways. A business broker can fulfill both of these needs. Protect yourself, your friendship and your future as a business owner by hiring a broker to help you with your transaction.
Are you considering buying a business from a friend but aren’t convinced you need the help of a broker? Do you have questions about what a purchase contract entails? Ask us! Leave any questions or comments here and we would be happy to help.
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