Services for Buyers
Buying a business:
Unless you've bought or sold a business in the past, you may be unprepared for what awaits you. If you're a veteran in business transfers, and you've bought and sold many small businesses, you understand the value of the VR process that will assist you in working with our firm.
First Step:
There are many different motivations to own your own business. Perhaps you want to expand an existing business in a new geography or find life in the corporate world unfulfilling. If you’ve never bought a business before, don’t loose heart, we can help.
Because of the wide variety of businesses for sale, it will help to make things easier for all parties to help bring some critical thinking to the process. Consider how much you have to put down for a business, what geography you want the business in, how big a staff are you comfortable managing, what industry experience and background to you bring to the table? In addition, we can direct you to aptitude tests that may help estimate your appetite for risk and the other attributes required of an entrepreneur.
Beginning the Search
Now that you have some sense of yourself and the general direction for business ownership, it’s time to consider the possibilities. Our web site, and several others have a universe of opportunities. Try to visualize yourself in these opportunities and see how the financial fit looks. You might think about the cash available that you identified in the previous step as one possible screen to determine businesses. At the best case 15% down, and in many cases 50% down would be a way to look at these opportunities.
Refining the Search
You may have selected a handful of the businesses you’ve found on the web or through a discussion with your VR salesperson. Now you want to know more.
This new level is one of mutual trust and obligation between you, VR and the Seller(s) of the business(es) you're interested in. Now you're being exposed to the specifics about the businesses you've been considering and your agreement to keep this information confidential is required. Before we send you confidential information, we require you to send us your Buyer Profile and we require you to sign a Non-Disclosure and Confidentiality Agreement. When you return these documents to us, we'll divulge to you the name and address of the business you're interested in. Please note that when you sign the Non-Disclosure Agreement you are agreeing to keep all of the information that you receive from us strictly confidential. And, you are agreeing not to contact the owner of the business except through us and with our permission. We take any violation of this bond of trust between you and us very seriously, and we will not tolerate any breeches of this trust.
The Business Profile
The seller is busy running his business. We are busy selling his
business, and we will be the contact for getting the information you need
to evaluate this business. The starting point is the VR business
profile. This report gets into the guts of the business, the marketing,
financial, lease, employee, competitive and other aspects of the business.
After a thorough review of the Business Profile and discussions with
your VR representative, you will have a good understanding of the
business and its operations.
Choosing the Business
After reading the VR Business Profile, reviewing financial data you should be prepared to make an offer for the business. If not, your VR representative will answer further questions and may, if indicated, set up a meeting with the business owner prior to your making an offer. This is an important step. Not only are you learning more about the business from the person who knows the most about it, you are also seeking to tell the business owner as much about you as possible since you may be seeking installment terms from the business owner. Often, Buyer credentials are presented at this time.
Making the Offer:
After meeting the business owner and touring the business, the next step is making an offer for the business. Making an offer is not a final step. In fact, it should be viewed as the first of several steps, each of which bring the Buyer and Seller closer to completing the transaction.
Since this is a privately held business, the Buyer is obligated to make an offer before seeing the business' detailed internal financial records. The Buyer must understand that their offer is always contingent upon the Seller proving his or her representations. Due diligence is a specified period of time during which the Buyer investigates the business fully. This process is costly and time-consuming, and it must be done only after an agreement on price and terms have been reached.
It's the Seller's responsibility to prove everything to the Buyer. Put another way, your agreement on price and terms will be "non-binding" until you've had the opportunity to see all financial records and we have removed all contingencies.
The Offer Structure
Your Offer To Purchase will consist of the following:
Terms. Price, down payment and agreed-to financing (interest rate, period, etc.).
Contingencies. Approval of books and records, equipment, inventory, assignment of leases or loans and any other items that the Buyer requests to be incorporated into the structure of the agreement.
Conditions. Non-compete clauses, consulting agreements, training agreements and other relevant parts of the structure of the agreement.
Your resume of business background and experience.
Your financial statement.
Your credit report (paid for by you).
"Earnest Money" deposit check in the amount of 10% of the offered price. This check is not deposited until the close of the due diligence period and you are comfortable moving forward with your purchase. Typically, your check is cashed upon the opening of escrow.
Due Diligence: You and your advisors - attorney, accountant and others - will have a specified period of time to complete your due diligence and remove the contingencies (typically 10 days). When due diligence is complete and the contingencies are removed, the contract is binding. Should the business fail to pass due diligence, you are free to rescind or amend your Offer To Purchase.
Financing: Working with Sellers and the SBA. Almost every deal requires some form of financing. At VR we work with Buyers to help obtain the appropriate financing for the business being purchased. Often, this means a Seller's Note and it also often means a bank loan guaranteed by the Small Business Administration. But whatever the financing requirements, Buyers can expect guidance and assistance from VR in this important area.
Escrow & Closing
Escrow typically takes about 3-4 weeks. After escrow receives signed instructions, the escrow officer will contact government tax agencies for clearance and publish your fictitious name filing, enabling you to open business and banking accounts. Also during this time a Notice To Creditors will be published allowing anyone with a claim against the business to step forward.
You're In Business:
Congratulations. When you work with VR, we guide you along the way and help make your transition to business owner stress free and simple.
Now is the time to go back to our "Businesses For Sale" section and get started on your search for your part of the American dream.