Hate Sharing Personal Information? A Business Buyer Must

Posted in Buyers Articles

Published January 20, 2020

It’s a question we get asked all the time. Why do you need to know my personal information for the NDA (Non-Disclosure Agreement)? 

 

 

Sharing personal information can be difficult, especially with a person you have likely never met and only know via conversations on the phone. 

 

Guess what? When you begin your foray into the purchase of a business, you will need to come to a level of comfort with sharing your personal information. 

 

For starters, a business broker will need your full legal name, permanent physical address and email (if not more) before they can send you a non-disclosure agreement to sign. The NDA protects the business from disclosure – of its for-sale status, of its proprietary information and its confidential financial documents to name a few. 

 

To gain access to such a large amount of information a prospective business buyer only needs to offer up the paltry pieces of information listed above – like their name, address and email. 

 

Why? It’s simple. The NDA only works if it can be linked to a specific person. There might be hundreds of men named John Smith in a particular city, but there is only one John Smith who lives at a particular address, has a particular phone number and a specific email. 

 

Many first-time buyers balk at providing their personal information for the NDA, but the reality is you are going to have to get used to sharing your personal information if you want business sellers to share possibly proprietary or confidential information about their businesses with you. The NDA is only the first, and the least intrusive, of the documentation that will be required during the process of buying a business. Down the line you will need proof of your finances for both the seller and your new commercial landlord, you may need to pass a background check and get fingerprinted for certain types of business licensing, you will possibly need to supply a history of your education and work experience, etc.

 

While it might from the outset seem intrusive, consider the view from the other side of the negotiating table. A business seller has to share everything about their business with you, so asking for some identification as to who you are at the outset isn’t that much of a stretch.

 

The point here is, while uncomfortable, sharing your personal information is going to be a large part of the business buying process – so the sooner you get used to that fact, the better. 

 

Are you considering buying a business, but aren’t sure you want to share your personal information? Would you like to know more about how your information will be used or shared? Ask us! Feel free to leave any questions or comments and we would be happy to help. 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

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Buying? How You Should Look At A Business

Posted in Buyers Articles

Published December 16, 2019

 

When most first-time business buyers first call us, they have only one request – they want to go see some businesses. They want to drive by, pop in and take a tour.

 

This is exactly the opposite of what a new buyer should ask for. You are buying a business, not a house – and the differences between the two are huge.

 

A house is four walls and the stuff inside. To make a judgement about whether or not a particular house is a good investment, you need to walk around and have a look at those four walls and the stuff inside.

 

An operating business is not four walls and the stuff inside.

 

The four walls are usually leased from someone else and the equipment and furnishings are the assets of the business – not the business itself. Yes, when you buy a business you also buy the assets, but that isn’t all you are getting. You are getting cash flow.

 

You can’t drive by, pop in or take a tour of cash flow. You learn whether or not a business is a good investment by looking at the numbers, by talking to the seller, by going over inventory lists and by examining contracts.

 

The depreciated value of the equipment, the furnishings, the vehicles, even the color of the paint have very little to do with how a business is priced and should have very little to do with how you judge the price of a business. As such, tours are really not that important. Aesthetics can be easily changed once you take over – so focus on how the business makes money instead.

 

A better way to look at businesses starts with a conversation with an experienced and qualified business broker. In this initial conversation you and your broker will talk about what your goals are for business ownership and then search for businesses based on those goals. Once you have a few businesses in mind your broker can help you decide if the price is fair based on the numbers and also help you decide if you want to pursue more information.

 

Want to take a quick peek at what types of business are currently for sale? Use our Business Search Tool by clicking here.

 

Have more questions about buying a business? Ask us! Please leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

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Buying A Business? Patience Is A Must

Posted in Buyers Articles

Published December 9, 2019

We’ve talked about this issue a handful of times, but it is so prevalent in the day-to-day of buying and selling businesses it merits revisiting from time to time. A great business broker spends their work day keeping business deals on track and moving towards a closing table, but they are only one part of a very complicated process.

 

 

As such, you as a buyer may get frustrated by the pace of your transaction – but in many cases there is absolutely nothing your broker can do.

 

What you need to remember is the only cure for tied hands is patience.

 

Here’s an example:

 

You are a motivated buyer who is very interested in a particular business and have put a decent offer on the table. You request through the seller’s business broker that the seller send over the information required for due diligence, like financial records, tax returns, etc.

 

Then you wait. And you wait.

 

Then the seller sends over partial records, which get forwarded to you from your broker, but the rest of the information you requested has yet to be produced. So you wait.

 

You constantly call and email your broker, and all they can tell you is they haven’t received the information from the seller so their hands are tied. 

 

Why does this happen?

 

Some sellers go on the market with the initial intention of reaching a closing table, but once they are in the process they realize that selling their business requires a ton of work on top of what is already required for the day-to-day operation of their business (producing information and being available for questions/meetings). Then they completely panic because are shortly going to be out of a job.

 

These realizations can cause some sellers to develop a decent case of cold feet. It can also cause a seller to be defensive, as constant requests for more financial information can give the impression that the buyer is trying to dig up dirt on the business.

 

This, of course, is not the case. Buying a business is a huge decision, and most buyers are going to want a thorough look at any business before they pull the trigger.

 

So how do you figure out if the problem is your broker or the seller?

 

If your broker is really good about answering your questions, is prompt with returning phone calls and emails and has been forthcoming about the issues they may be having with the other side – then their hands are probably are tied. If it takes your broker ten days to return your phone calls, then the problem is probably the broker.

 

As with everything in a business transaction, a good dose of patience will go a long way. This does not mean, however, that you have to sit around and wait for a seller to deliver information they have no intention of ever giving you. Talk to your broker if you have concerns about time frame issues, and understand that sometimes there really isn’t anything a broker can do to speed up the process.

 

Are you a buyer who is having a hard time getting information out of sellers? Are you concerned that the issue may be with your current broker and not with the seller? Please feel free to leave us a comment or question here, and we will be happy to assist you.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Are You Compulsive With NDAs? The Wrong Approach

Posted in Become a Business Owner, Buyers Articles

Published November 25, 2019

Are you a buyer like this? Have you requested information on dozens of businesses and then when asked a question about one of these listings – you can’t remember which one we’re talking about?

 

 

Are you requesting and then signing Non-Disclosure Agreements (NDAs) like it’s going out of style? Guess what? You are probably NEVER going to buy a business. Never. Not going to happen. Why?

 

Dozens and dozens of NDAs is not the way a successful buyer finds and then buys a business.

 

Buying a business requires that you keep your eye on the goal – successful business ownership.

 

What do we mean by that?

 

First and foremost, signing the NDA should come after you’ve already made some decisions about whether of not a particular business is really what you’re looking for. You shouldn’t buy a business based on where it is, how it looks, or what the tax returns say. This is the information you will be able to access after you’ve signed the NDA. Sure, these are all important parts of a business, but as a buyer you need to be focused on whether a particular business is going to meet your goals for business ownership. The major mistake that unsuccessful business buyers and unsuccessful business owners make is they never considered what they want out of business ownership.

 

If your goal for business ownership is to have more time to spend with your family and the ability to do things like coach your kid’s soccer team – then buying the bar you think you’ve always wanted isn’t going to work – you’ll have to work seven nights a week. If your goal for business ownership is to make more money than you do at your current job, then buying a huge restaurant with zero restaurant industry experience isn’t going to work – you’ll be bankrupt in six months.

 

The path to a successful business purchase starts with a conversation. You and your business broker should have a talk about what your goals for business ownership are, about your prior work experience and about the amount of money you are looking to invest in a business. Then, and only then, should you sign NDAs for the businesses that will actually meet those goals. You might be surprised that a business you never would have considered on your own could be the perfect fit.

 

Narrow down your search, then request the information you need. This will help you keep your eye on the goal of business ownership.

 

Are you looking for businesses to buy but haven’t had a conversation about what your goals for business ownership are? Do you want to know more about how to successfully buy a business? Ask us! Please feel free to leave any questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

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3 Big Steps For Business Buyers

Posted in Become a Business Owner, Buyers Articles

Published November 18, 2019

Ready to buy your own business?

 

 

Step 1: Arranging Capital

 

You could probably guess that step one is figuring out how you are going to pay for your new venture. 

 

If you don’t have enough cash on hand to fully fund the purchase of a business there are several resources available which you could tap. These options consist of acquiring funds from the Small Business Administration (SBA), traditional financial institutions like banks or seller financing.

 

No matter what the source of funds, any lender is going to have conditions which you will have to satisfy if you want to be approved for said funds. They are going to require you to have adequate cash readily available for a down payment in addition to having sufficient working capital to sustain the business.

 

You will need to be aware of and account for costs like closing fees. It is possible to either pay for the closing fees up front or plan to have them incorporated within the amount that you will be financing.

 

Having financing or at least a down payment in place before you begin your business search will simplify the process of finding the right business for you.

 

Step 2: Making Offers

 

You found a business that meets with your goals and have finished going over the initial financial records. You think this might be the business for you. It is time to make an offer, but how do you determine what that offer should be?

 

First, consult with your business broker. There are considerations that influence price such as the amount comparable businesses have actually sold for, the value of inventory and contracts, the amount of cash flow the business currently generates – the list goes on. By consulting with your business broker you can consider all aspects and decide whether the asking price is fair and how much you are willing to offer.

 

Step 3: Due Diligence

 

After an offer is accepted, the offer you submitted essentially becomes the purchase contract and you will move to the next stage – due diligence. This is a crucial step when purchasing a business.  It is due diligence which enables you to figure out whether or not this business is for you. It also helps to determine what price you will be prepared to pay for it.

 

Due diligence will begin with examining previous years of financial records. You will be able to learn about any unresolved legal actions, relationships with vendors and clients, intellectual property rights including copyrights or patents, as well as any future liabilities.

 

Once you have all the necessary information you can make an informed decision about whether or not to proceed. This is the nature and necessity of due diligence. Your findings during due diligence may also modify the amount you are willing to pay for the business. 

 

As soon as you have arrived at what you feel is a complete picture of the business and have also arrived at a price that takes into account what you found during due diligence – you and the seller will negotiate to amend the purchase contract and proceed to the closing table. This step typically requires using the expertise and negotiating skills of your business broker, and possibly a CPA and/or attorney to guide you through the process.

 

While buying a business might initially seem like a monumental task, when broken down into basic steps it is absolutely possible for any driven future entrepreneur. 

 

Do you have more questions about the steps required to buy a business? Would you like to know more about the due diligence process? Ask us! Please feel free to leave any questions or comments, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

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Business Buyer 101: How Long Does It Take To Buy A Business?

Posted in Buyers Articles

Published November 11, 2019

 

For most businesses, the time on the market between listing and selling is in the neighborhood of 9 to 12 months. The typical time between an accepted purchase contract and the closing table is somewhere around 30 to 90 days. These industry stats might be helpful for a business seller, but if you are a buyer – what does the process of buying a business mean in terms of time frame? How long will it take a buyer to buy a business?

 

The answer is it depends. And it’s really complicated.

 

Yes, that’s a terrible answer, but it’s the truth. Here’s why:

 

It depends on the industry.

Like any market there are waves of popularity for specific types of businesses – and if the type of business you are looking for is a hot commodity, it might take you a while to get your hands on one. Great businesses in popular categories land under contract very quickly, so you might miss out on a few before you get lucky. What that means for time frame is a lot of waiting around for another shot.

 

It depends on what’s for sale.

You might have a specific type of business in mind, but within that category the current choices on the market may not hit enough of your criteria to warrant a purchase. Like the popular industry problem we just talked about, waiting for a business to come up for sale that fits what you want could take a while.

 

It depends on the complexities of the purchase contract.

Even if you luck out and get a business that suits your goals under contract, the length of time to get from accepted contract to closing varies from deal to deal. Some close quickly, in a month or so. Some contracts need to be negotiated for over a year. It depends on many, many factors and varies considerably from deal to deal. You may have many aspects of the purchase contract to negotiate or it may be very straightforward. The only way to know will be to get to this phase of the transaction and then to have some patience with the process. 

 

It depends on the existence of financing.

If you aren’t paying all-cash for your new business (most people don’t), then the time frame can be prolonged because of financing issues. If you are working out a deal where seller financing is in the mix, that can add another layer to the negotiation process. If you are getting your funding through a more traditional lending institution or through the Small Business Administration (SBA), then the time table of that lender will also play into the mix.

 

It depends on the motivation of the buyer.

It can be really difficult to make a huge decision like the decision to buy a business, mostly because there is no such thing as the perfect business to buy. Many, many buyers (90%) enter the market and never buy anything. As such, looking at the average time it takes the full population of buyers to buy a business probably won’t be very helpful. You can also be extremely motivated and the business you’re hoping for just isn’t out there at the moment.

 

The point here is the length of time it takes you to find the right business and then reach a closing table isn’t as important as focusing on making sure the business you end up with fits your goals. It also isn’t as important as staying motivated and patient with the process. If owning a business really is in your future, you will be able to meet your goal.

 

Have more questions about the process to buy a business? Are you curious about what types of businesses are currently on the market? Use our Business Search tool by clicking here! Otherwise, feel free to leave any questions or comments and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

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Buying? What You Need To Know About Confidentiality

Posted in Buyers Articles

Published November 4, 2019

Buying a business is a big task, and there are many steps ahead of you that might seem ridiculous – but all are a necessary part of a successful business transaction.

 

The most important of these steps is the signing of confidentiality agreements and then keeping that confidentiality in place.

 

This can be a frustrating part of the process for buyers. The confidential nature of business sales means you can’t have all of the information you want the moment you want it – and you will have to sign non-disclosure agreements for each and every business you seriously consider, all without knowing very much about the business before you do.

 

 

Keeping the for-sale status of a business a closely-guarded secret is absolutely imperative for the health (and possibly survival) of the business. When people find out a business is for sale, they immediately assume the worst. A business for sale must be a business on the brink of ruin. Why would anyone sell a perfectly good business?

 

Well, there are a lot of reasons. Reaching retirement age, the desire to move to a new area, wanting to pursue a different business venture, reaching a pre-planned goal within a business initially purchased for the purpose growth and then a sale – all of these reasons mean a business is healthy, not failing.

 

In general, however, that false perception that a business for sale is a failing business can cause an enormous amount of havoc in an operating business. The entire staff can quit, customers can go elsewhere, contracts can be cancelled – all things that can severely affect the bottom line.

 

For you as a buyer, the confidential nature of business sales means you must sign non-disclosure agreements and you must abide by them. Period.

 

You can’t change the language of the agreement to remove the penalties for you if you break the agreement. Non-disclosure agreements come in a standard form used throughout the industry and are not open for negotiation. If buyers could change the agreement to remove the penalties for a disclosure, then there really isn’t any point in having non-disclosure agreements in the first place.

 

You also can’t tell anyone who is outside of the transaction that the business is for sale (like your mother-in-law, your neighbor, your golf buddies, etc.). The only people who should have access to any confidential information is the buyer, the seller, the brokers, CPAs and attorneys involved.  

 

While the confidential nature of business sales might seem like a giant pain – you should consider it a great thing for you as a business buyer. Confidentiality means that the business you want to buy hasn’t been trashed by the careless disclosure of it’s for-sale status by a buyer that considered it before you did. You will get your new business intact and healthy.

 

Do you have questions about non-disclosure agreements or questions about the business buying process in general? Please feel free to contact us here or comment below. We would be happy to answer any questions you might have.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

 

 

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Learning To Love The NDA – Thoughts For Business Buyers

Posted in Become a Business Owner, Buyers Articles

Published October 14, 2019

If you are a business buyer, you should absolutely love the business transaction process – especially the tenant of confidentiality and the need to sign non-disclosure agreements (NDAs). Why? Let’s first talk about why some business buyers hate NDAs.

 

 

When you enter the market to buy a business, many new buyers assume the process will be very much like the process to buy a house. Nothing could be farther from the truth. Buying a business does NOT involve looking up businesses for sale and then driving around to look at them before you pick one to buy.

 

Why? When you buy a business you are buying an existing, operating business.

 

In order for that business to stay existing and operating the fact it is for sale needs to stay a closely guarded secret. Confidentiality is key.

 

A breach in confidentiality and the disclosure that a business is for sale can mean very bad things. People naturally assume a business that is for sale is a business that is on the brink of failure, although this is rarely true. When a business sale is disclosed the staff can quit en masse, vendors can cancel contracts, clients can go elsewhere – the list goes on.

 

These potentially catastrophic consequences mean anyone who is interested in buying a business must sign the NDA before the name and location of that particular business is disclosed. Some buyers hate this and refuse to sign the NDA or fight with brokers about providing their own information to receive the NDA.

 

The information you provide in order to sign the NDA for a particular business is both simple and straightforward. You must provide your full name, your home address, your phone number and your email. Why do we need this information? Why can’t you use your P.O. box or a business address instead of your home address? The NDA you are signing needs to be tied to one individual – you – so the same address you use on your driver’s licence must be used.

 

If you really feel uncomfortable providing this information, you should consider that your simple identifying information is paltry in comparison to what a business discloses to you once the NDA is signed. Not only will you now know the name and location of the business that is for sale, you will likely gain access to financial information as well.

 

You should also consider that the information you provide to get the NDA is the same information you would provide when signing up for a discount card at a grocery store. It’s really not a huge disclosure of personal information when you think about it.   

 

So why should you love the NDA? The business transaction process, including the NDA, ensures that the business you end up buying hasn’t had a catastrophic disclosure of confidentiality by you or any other prospective buyer before you get handed the keys. It means your new business will transfer to you intact and still operational.

 

Still need convincing that the NDA is a great thing for you as a buyer? Do you have additional questions about the business buying process? Ask us! Please feel free to leave questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

 

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The Toxic Myth Of The Perfect Business – How To Handle Messy Books

Posted in Become a Business Owner, Buyers Articles

Published September 16, 2019

It is a very common complaint in the world of business sales. A buyer comes to the market with money in hand and ready to buy the right business – but every time they request financial documentation what they get is poorly assembled numbers, difficult to understand tax returns and no current financials of any kind.

 

Do they want to sell their business or not?

 

What you have to remember about the small business world is owning your own business is a tough and time-intensive enterprise. Small business owners are great at what they do, but most are not trained accountants. Many times record keeping and financial documentation fall down the priority list, and what a buyer is left with is what the seller was able put together in the short time the business has been listed.

 

 

When we take on a listing for a small business we often get handed nothing more than a big box of crumpled papers and register tapes – and have to figure out the numbers from there. This is not true of all small businesses, as some owners are better record keepers than others – but you have to remember that even a great business may not have the world’s most organized books.

 

It is also typically true that the larger the business is, the more likely it is that they have an accountant on payroll and therefore the more complete the records will be – but if you are in the market for a small business you probably don’t have the couple of million dollars you would need to buy one of these higher-priced and more-complete-records businesses.

 

What should I do then? How can I decide with seemingly incomplete records?

 

Have patience, and understand that you will never get perfectly organized books. What you will get is the opportunity to look at all of the financial records of a business once you have entered the due diligence phase. Your business broker will be there to help you, and if the books really are a mess then perhaps an accountant familiar with business transactions will be brought in.

 

What you can do as a buyer is use that not-so-pretty cursory information you get with your first requests – like P&L statements and tax returns – to weed out businesses that don’t suit you and focus a more thorough look on on the ones that do.

 

Are you in the market to buy a business, but are disappointed with the information you’ve been sent so far? Would you like to know more about how we as brokers turn that jumbled box of paperwork into use-able numbers? Please feel free to leave any questions or comments here, we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

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Am I Buying The Building? Commercial Leases And Business Buyers

Posted in Become a Business Owner, Buyers Articles

Published September 2, 2019

If you are new to the world of buying a business, then you likely have some basic questions that need to be answered before you really get rolling. One very common question we get from the curious future entrepreneur when discussing businesses to buy is:

 

Do I have to buy the building too?

 

 

The answer to this question is almost always no, as commercial leases are the norm in the small business world.

 

What do I need to know about commercial leases when I’m looking to buy a business?

 

First and foremost, you can’t simply look at the amount of rent the current owner pays and the length of time left on the current owner’s lease to understand the nuances of the commercial lease market. It is also very important to understand that while you as a new owner will get a new lease, the rent amount itself is unlikely to change in a major way (and if it does change it will probably go up, not down) – especially if the current lease has quite a bit of time left. The property owner already has someone who is committed to paying that rate for the remainder of the lease term, so they have no motivation to change the terms of the lease for a new owner.

 

Commercial lease rates depend on a large number of factors, but in general it will depend on where the business is located. In some parts of town you may be able to get a commercial lease at $8 per square foot, while in another part of town not far away the typical lease rate will be more like $40 per square foot. A property on a main street or in a plaza with a strong anchor business will fetch higher rent than a business somewhere off the beaten path. A location on the water will also have a higher rent rate.

 

If you are in the initial phases of searching for a business and think a particular rent rate looks ridiculous, don’t make a judgment on the business or the lease until after you have spoken to your business broker. They will be able to tell you if a lease rate is truly ridiculous, or (more likely) if a lease rate is in line with the current location of the business. It is also far more important to look at the cash flow of a business than to get hung up on the lease.

 

In terms of renegotiating the lease rate, it will depend on a number of factors – like the length of time left on the current lease and other factors (like location) that we’ve already discussed. In some business transactions there will be a little wiggle room on price – but for the most part a property owner is not going to cut a lease rate significantly for a new business owner.

 

While you won’t be able to cut the lease rate in half, you will more than likely get a chance to renegotiate other parts of the lease, like the length. For instance, if the current owner only has six months left on their commercial lease, you certainly can’t be expected to pay $100,000 for a business with no guarantee on the current location for anything more than that short amount of time. Your lease will likely be renegotiated for a much longer term, sometimes 5 or 10 years. Each situation and each property is different – so you will need the expertise of your business broker for this part of the renegotiation.

 

If you are new to the process of buying a business, don’t get hung up on seemingly high lease rates or on short lease terms. Your business broker is there to help you understand any lease and also to renegotiate a lease to best suit your interests as the new owner of a business.

 

Are you searching for businesses and have questions about why certain lease rates are so high? Do you want to know which areas typically have lower lease rates? Ask us! Please leave any questions or comments here and we will be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

www.InfinityBusinessBrokers.com

 

 

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202



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