what paperwork is required to buy a business Archives - Page 4 of 10

Published April 4, 2022

When you are serious about buying a business and ready to jump into the process, you aren’t going to show up one day and own a business the next. It’s going to take time. Probably more time than you thought. Most business transactions take months to get from the initial interest of a buyer all the way to a closing table, and that’s if both sides agree on most things.

Why does it take so long? Small businesses are complicated animals, and business transactions have a lot of moving parts. On the buyer’s side of the equation you will be putting together offers, going through documentation, getting your own licenses and permits sorted out, negotiating with sellers, meeting with attorneys and CPAs, talking to your business broker, touring physical locations, negotiating with your commercial landlord, having meetings and conference calls with the seller – you get the idea. It can at times feel like you have a new part-time or even a full-time job.

If you really want to buy a business you’re going to need to make the time to do the things that need to be done. You can’t come in and expect it all to be finished in a few days with very little effort on your part. You’re going to have to spend evenings researching. You’re going to have to be patient with the negotiation process. You’re going to have to be willing to put in the work to provide the information about yourself that’s requested. You’re going to have to get your license and permit applications done. You’re going to have to make lots of phone calls and have lots of meetings. It can feel like a long list – but it’s not impossible.

If you’re worried about the amount of time and effort you’re going to have to put into buying a business, don’t. Small business ownership is a life encompassing affair – so if you aren’t willing to put in the effort and energy it’s going to take to get through the business buying process you probably shouldn’t be buying a business in the first place. Remember that all the work that you do before you sign at the closing table is work you are doing to help yourself. All of the time and effort you spend up front will be instrumental for setting you up for success in your new business venture.

For example, the bureaucracy that is the licensing and permitting process for small businesses can be complicated and slow. If you drag your feet on licensing and permitting requirements, putting everything off until your closing date is looming, you’re going to be scrambling when the business keys get handed to you and you’re not properly squared away in terms of license requirements. In many cases if you haven’t worked out your licensing requirements you won’t be able to open the business until you get it straightened out. If you stay on top of what needs to be done you won’t cause yourself any issues when it’s your turn to take the reins.

The message here is you need to be prepared to spend some time and exert some effort if you want to become a business owner – but all the work you do will pay off once you get handed the keys.

Have you always wanted to buy your own business but are worried about what’s required for the transaction process? Would you like to know what businesses are currently available that would meet your goals for business ownership? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Planning Your Trip: 3 Tips For Relocating Business Buyers

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published March 28, 2022

Maybe it was the lockdowns of the pandemic. Maybe it’s just that you’re burned out. Whatever the reason, you’ve been daydreaming about moving somewhere else and buying a business. Guess what? There’s no better time than now to make the leap.

Want some tips on how to start? Here’s 3:

Do lots of research:

This one might sound obvious, but most people would be shocked at how little research most buyers do before taking a huge leap like this. Take a deep dive into the locations that interest you. If it’s somewhere you’ve only ever visited on vacation, research what it’s like to live there year-round. Is it a seasonal economy that you’ll need to account for when choosing the type of business to buy? Can you afford to buy or rent a home close enough to your business to make your commute make sense? If you have kids – what are the schools like and where do you need to live in order to get your kids into a school where they’ll be successful? What are the property taxes like? Are crazy weather events like hurricanes something you need to think about? The point here is you need to have a good handle on where you both want to and realistically can be long before you start a serious search for businesses to buy.

Find the right help:

If you’re serious about buying a business in a new area, a local business broker is going to be an immense help. They know the area, the local small business economy, the local licensing/permitting requirements, the major players in terms of commercial property managers – the list goes on and on. Having someone with local experience as your guide will make both finding the right business and navigating the buying process much easier than going it alone or using someone who doesn’t know the area.

Have the site visits planned way before you leave for your trip:

Seeing a business you are considering is an important step, but what many buyers don’t understand is this step never comes first. Businesses are bought and sold under the protection of confidentiality (see why here), so you can’t just fly into town and waltz into whatever business you please. The steps that are required before you set foot in a physical location go like this:

You talk to a local business broker about your goals for business ownership, the industries you’re interested in and the amount of capital you have to invest. They find you business listings that would match your goals and means. If any of those listings look promising you can request more information by signing a non-disclosure agreement for each business you’re still considering. After looking over the information a conference call with the sellers is next, so you can ask questions about the business and see if it’s still a good fit. If after your calls you’d like to see the physical location this can be arranged. It usually requires seeing the business before or after hours when no staff or customers are around and will need to be coordinated between the schedules of the seller, the buyer and the brokers involved. It should be obvious that this process can’t be completed once you’ve landed on your scouting trip and have called a local broker for the very first time. You need to plan your site visits when you are doing your initial trip planning – like before you’ve even bought your plane tickets. It is a colossal waste of your own time to fly in and see businesses you haven’t already vetted, so plan your trip with that in mind.

If you’re considering a big move – now is the time. Contact a local business broker and get the process moving!

Have you always wanted to move somewhere else and own your own business? Do you have more questions about the steps of the business buying process? Ask us! Leave any questions or comments and we would be happy to help!

Michael Monnot

A Business Is Not A House – And Why This Matters

Published February 28, 2022

Yes, we know. Obviously, a business is not a house. Here’s the point we’re trying to make:

Some prospective business buyers approach the business buying process as if they were buying a house or maybe even a car. This is an enormous mistake.

They typically call us when they’re already in town, a trip that’s been planned for weeks or months. Did they have the foresight while planning this trip to think of talking to someone about looking at businesses? Nope. They just call to say they’re here. They want us to drop all of the clients we already have meetings and calls with that day to drive them around so they can look at the physical locations of all of the businesses that are currently on the market. They then expect that we can waltz into any business that seems to interest them, introduce ourselves to the staff and management – and ask why the business is for sale.

This is NOT how you go about buying a business.

You can’t treat a business like a house for a lot of reasons. An operating business is just that – operating. It has a staff, vendors and competition. It has customers on site.

There is a misleading perception that any business for sale is a business on the brink of failure. It is this perception that can cause catastrophic losses and serious ramifications if the for-sale status of a business is disclosed to the wrong people (think the staff, vendors, the general public and the competition). An entire staff can quit. Customers can cancel contracts. The list goes on. Confidentiality in business sales is key, so anyone who is serious about buying a business needs to play by the rules of confidentiality. Those rules take planning and they take time.

How should you buy a business?

If you’re looking for businesses that aren’t in your current area, you should call and talk to a local business broker while you are buying your plane tickets or setting up your travel plans to visit your future relocation spot. Talk to the business broker about your goals for business ownership, the industries that you’re interested in and the areas where you have practical experience. You and the broker can spend a few weeks researching and searching – looking for the right business opportunities in your new area.

Once you have found a few businesses that interest you, you will be required to sign non-disclosure agreements before you are allowed to know the business name or location. The non-disclosures will also give you access to further information, things like P&L statements and past tax returns. You can use that information to narrow down your choices and then request a conference call with the sellers of the businesses that still interest you. By looking at the cursory financial information and talking to the other side you can decide if any of the businesses on your list will still fit with your goals. Those that do will be your final list, and these are the businesses worth seeing in person.

Some buyers have a hard time with this concept – that they can’t tour physical locations as the first step. Here’s what you need to remember: an operating business has value because an operating business creates cash flow. You are buying this cash flow – not a physical space, so seeing it in person isn’t as important as it would be for something like a house.

The veil of confidentiality is also so crucially important, even for you as a buyer. You wouldn’t want a business that you are seriously considering to be destroyed by someone else’s careless disclosure of the for-sale status – so understand that the process is built to protect the business that might be yours someday. You will need a bit of patience to see the process through to the end.

Don’t treat buying a business like buying a house. Remember that you are buying yourself a future life, and for such an enormous endeavor some pre-planning must take place – so call a business broker long before you get to town.

Are you thinking about buying a business and have more questions about the business buying process? Would you like to know what types of businesses are currently for sale in the areas you’re considering? Ask us! Please leave any questions or comments, we would be happy to help.

Michael Monnot

Buying A Business? Why You Should Be Decisive And Make An Offer

Published February 21, 2022

You think you’re ready to buy. You’ve researched the market and found that in the industry you’re considering there is room for growth. This industry will suit you because you already have practical experience and familiarity. You’ve searched for businesses and discussed the options available for sale with your business broker, and you’ve settled on one choice that really interests you. The next step is to make an offer – but that idea seems terrifying. What if it turns out this isn’t the business for you?

It’s hard to make big decisions. You can research, ponder and then research some more – but at the end of the day the only way to move forward is to act.

Here’s the good news.

There are two types of offers that you can make, and you should consult with your business broker to determine which would work better in your unique situation. One is a Letter Of Intent (LOI) and the other is a Purchase Contract (sometimes just called an Offer). Either way you choose to proceed – you can walk away from the deal if you decide (for whatever reason) that this business isn’t for you. It’s that simple. You will also get ample time to go through the business (financial records, contracts, commercial leases and the like) during a process known as due diligence.

Once you’ve submitted your offer you will have both the time and information you need to make an educated and carefully considered decision about a business.

What happens if you don’t make an offer? Well, nothing. You don’t get a chance to really look at a business because no owner is going to allow a due diligence level investigation of their business if you don’t have ay intention of actually buying it. If you never make offers you end up in a business buyer purgatory with everyone who is just there to kick tires.

If what you really want is to own your own business, you have to start taking those next steps and being decisive. Making an offer tells everyone involved in the deal that you’re a serious buyer and deserve to be treated as such.

Do you really want to buy a business, but making an offer seems like a daunting step? Are there questions about the types of offers you’d like answered? Have you made an offer on a business that you ended up not buying and have an experience to share? Please feel free to leave any questions or comments, we would be happy to help.

Michael Monnot

Your Social Media Persona – Why Business Buyers Need To Google Themselves

Published February 7, 2022

You’ve decided you’d like to buy a business, so you start a cursory business search. Listings are purposefully vague (see why here), so after you’ve signed the appropriate NDA you’re finally given the name and address of a potential business.

What’s the first thing you do? That’s easy. You Google it.

In the digital age, this is a natural first step. You want to know everything about this potential business – the good, the bad and the ugly. The internet will absolutely provide all three.

Have you thought about this? If you like a business and want to move forward with conference calls and meetings with the seller (the next step) – they find out who you are too.

Guess what they’re going to do? Google you.

A seller doesn’t just see their business as a building and some inventory. It’s their energy and money, their passion and time spent, it’s employees and customers they consider friends. Simply put, their business is their baby – and they aren’t likely to hand over their baby to someone they don’t feel is up to the job. They want to know that the person who takes the reins is capable, mentally stable and likely to succeed. Does the you that exists online look like that?

Does your online persona appear professional, or do you exist on the internet as someone who you would think twice about hiring as an employee?

It’s easy to get sucked in to the darker side of social media by going on long political rants, engaging in heated comment arguments, by posting funny memes, pictures and videos that even on a good day are problematic. Engaging with friends and strangers through a screen tends to remove the socially acceptable filters that you would normally have during in-person interactions.

While it might be fun to be able to do and say things you normally wouldn’t – it can be a huge problem when people who are deciding if they’d like a professional relationship with you (think business sellers, commercial landlords and the like) find the pseudo-anonymous social media you.

Here’s how to keep your online persona from derailing your chances of buying a business. Look yourself up, before anyone else does.

Throw your name into a search engine and see what comes up. Scroll through your social media feeds and have a look. Pretend you’re an employer researching a potential employee.

If the online you is less than professional, take some time and clean up your feeds. Delete posts, comments or accounts. Remove problematic profile pictures. Add back in professional accounts that show your accomplishments.

You wouldn’t show up to a job interview in dirty pajamas yelling about the news. Treat your online existence the same way.

Are you considering buying a business and haven’t considered how you look on the other side of a Google search? Do you have questions about when and how business sellers find out who you are? Would you like to know more about the process to buy a business? Ask us! Please leave any questions or comments, we would be happy to help.

Michael Monnot

3 Tips To Start Your Business Search

Posted in Become a Business Owner, Business Broker Why & How, Buyers Articles

Published December 6, 2021

If you are thinking about taking the entrepreneurial plunge by buying a business, you may be wondering where to start. Who should you talk to? What should you look for? How do you begin a search?

Here are 3 tips to get your business search going and put you on the path to small business ownership:

Get In Touch With A Business Broker

Many new buyers think that the services of business brokers are only for sellers, but nothing could be farther from the truth. A good local broker can help steer you in the right direction – both to the right industry and businesses that you can successfully afford.

In your first conversation with a good broker you will likely discuss what your goals are for business ownership, what capital you have readily available to invest in a small business, the industries where you have practical experience and the businesses you are considering. In some cases a buyer who is considering one industry may have more success meeting their goals for business ownership (like setting your own schedule or employing members of your family) by buying a business in an industry they hadn’t even thought of.

Do Some Self Searching

Owning a small business is a life-encompassing affair, and before you decide what type of business would be right for you, you need to think about what you want to get out of business ownership. Have you always dreamed of owning your own bar, but you’ve never worked so much as one day in the restaurant industry? Buying a business and becoming an owner overnight can come with a steep learning curve – you don’t want to add learning a whole new industry to the mix.

You also need to consider what you want your life as a business owner to look like. If part of your reason for transitioning to an entrepreneur is to give yourself more time with your kids – then owning a business like a bar where you will work seven days a week from 3pm to 3am probably isn’t going to leave a lot of time for coaching their little league team.

Do An Exploratory Search

Many prospective business buyers have a general idea in their minds of the type of business they would like to own, but after a cursory search they discover that there are business opportunities out there they’ve never even heard of or considered. Do a cursory search of the businesses available in the geographical areas that interest you and you may be surprised what you find. You can start your cursory search by clicking here, and then ask us about any interesting businesses you find by contacting us today.

If you are thinking about joining the world of small business owners – do some soul searching, talk to a good broker and do a little exploratory searching on your own. By opening the field of available and potential businesses you will have a greater chance of finding the perfect business for you.

Have you thought about buying a business but aren’t sure where to start? Do you have questions about how the business buying process works? Ask us! Please feel free to 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

Buying A Business? What Needs To Happen BEFORE You Get On The Plane

Published November 29, 2021

Another holiday season and the rapid approach of a new year can cause someone to rethink their current life and consider other options. Maybe you’ve been curious about what life might be like as the owner of a business. Maybe you’re visiting from a northern climate and the beautiful winter weather of Florida has you seriously considering a move south.

There are amazing business ownership opportunities in the Sunshine State, and we would love to help you find the one that is right for you – but there is one very important element of the business buying process that buyers should know long before they set foot on a plane.

You can’t call about a business one day and see it the next.

This one is frustrating for both business brokers and buyers alike. If you call us today and tell us you are only in town for another 24 hours and you want to see one of our businesses – the answer is always no.

We would love to accommodate you, but it just isn’t possible, especially during this time of year.

In order to see a business, we would have to know that the business is right for you and that it is a business you could successfully afford. There is no sense in wasting your time looking at businesses you couldn’t or wouldn’t want to buy. Then you would have to sign the appropriate non-disclosure agreements. A showing would need to be coordinated between your schedule, the schedule of your broker, the schedule of the seller’s broker, the schedules of the sellers themselves and at a time when the business isn’t operating or when the employees won’t be around (for confidentiality reasons).

This complicated mix of conversations, paperwork and meshing of schedules is going to be extremely tough (especially during the holiday months because people are traveling or hosting family and won’t be available).

It is possible, however, for all of the necessary background, non-disclosure agreements and schedule juggling to be done – with enough notice. Just realize that 24 hours or even a few days aren’t going to be enough.

If you are considering taking a trip south and looking at businesses, make contact with a broker and work on setting up these visits before you even buy your plane tickets.

We say this because we want your business search to be successful and we want you to find and see businesses that are right for you. The right business for you is going to depend on things we can’t know about you until we’ve had a chance to talk to you about your goals for business ownership and the amount of money you actually have available to buy a business. The right business for you will also be found by looking at many listings, reviewing financial statements and having conference calls with multiple sellers – all long before you set foot in an actual, physical business.

We also want you to be able to make the most out of your time here – so by researching and vetting the businesses that meet with your goals, by already talking to sellers via conference call – you can efficiently see the two or three businesses you are already serious about buying when you come for a visit.

Set yourself up for business buying success by starting your search BEFORE you buy your tickets to Florida!

Are you a buyer who has tried to see a business last-minute and would like to know more about why this isn’t possible? Are you curious about the business ownership opportunities available in Florida? Ask us! Leave any questions or comments here, and we would be happy to help you on your journey to business ownership.

Michael Monnot

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

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

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

Buying? Why Flexibility And Patience Are Your Best Bet

Published August 16, 2021

Most business owners and people considering business ownership have a particular type of personality. You could call it type-A, but it’s a bit more nuanced than that. Entrepreneurs are a tough bunch, used to taking risks and working hard to turn those risks into rewards. They’re comfortable with the idea that the buck stops with them and if they fail they only have themselves to blame.

This grit-based type of personality serves a business owner well. It gets you out of bed in the morning, it drives you to succeed. It’s a good thing – most of the time.

Here’s where having this type of personality can hang you up. The process required to buy a business.

The business transaction process can be a bit arduous. While an entrepreneur will probably have no trouble with the list of things that need to be accomplished – it can be extremely tough to navigate the difficulties that arise during the purchase of a business because no ONE person can be in control. That’s right. You can’t control the process.

This can cause entrepreneurs to balk at basically any part of the business transaction. From refusing to sign an industry-standard NDA because you didn’t write it, refusing to share your address in order to access proprietary information about a business you are considering, demanding an in-person walk through of a business location before you’ve ever asked a single question of the seller – the list goes on and on.

Look, we get it. When you’re used to being the one in command it can be deeply difficult to relent to someone else’s rules. Here’s what you have to remember. The business transaction process exists and proceeds the way it does for a reason. It works to protect businesses for sale while they are being sold. If it was your business on the market – you would absolutely demand that everyone play by the rules so your business wouldn’t falter.

If you are considering buying a business, you are going to have to let go of the notion that you will be in control. You have to sign NDAs. You have to provide your personal information in order to receive proprietary information about a business. You have to be patient with the seller when they are collecting the documentation you requested. You have to wait for people to call you or email you back. You can’t demand that everyone involved do what you want, when you want it – and then get upset when it doesn’t happen.

We aren’t saying that you should relent to everything. Buying a business is a huge decision and you should have timely access to all of the information you need to make an educated decision. What we are saying is you need to be flexible and patient in a way you may not be used to.

Are you thinking about buying a business and want to know more about what the process looks like? Would you like to know more about the timeline of a business transaction? 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