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Buying a business: It's a brand new ball
game
Unless you've bought or sold a business in the past, you'll
find that buying a business can be a confusing and even trying
experience for the unprepared. That's why it’s important
for you to take the time to read this explanation of the process.
Even if you're a veteran in business transfers, understanding
the VR process will assist you in working with our firm.
Getting Started: Questions and more questions
The search for a business opportunity almost always starts
with a telephone call or a visit to a web site like the one
we host at VR. Sometimes the prospective Buyer is a Corporation,
Private Investment Group or a sophisticated Private Investor
who has a very definite idea of the type of business wanted.
But, often the Buyer is a first time Buyer and is still in
the formative or exploratory phase of the search. Many times
a Buyer's first question is, "What kinds of businesses
do you have?"
Well, we have lots of businesses, so that's a tough question
to answer without some idea of the Buyer's resources, skills
and needs. Maybe we just listed Ford Motor Company and you,
our prospective Buyer, just happen to have several billion
dollars and a background in automobile manufacturing. There's
a match made in heaven, but it's a match we can't uncover
without questioning you and learning more about you.
So the first and most important step is telling us about
you. Be patient when we ask, "How many days per week
are you comfortable working?" and "Do you like having
employees?" and "How much cash do you have for a
down payment?" and many other questions. We're not just
asking: We're narrowing your search and saving you time and
aggravation. Our web site Buyer registration offers a message
block that is a great way to narrow your search and help us
help you find the business of your dreams.
Defining the search: Non-confidential Summaries
After we've talked for a while, we can probably begin narrowing
the search to a few appropriate business opportunities. At
this point, we communicate non-confidential summaries of our
exclusive opportunities to you in a number of ways. Since
you're viewing our web site you can see the non-confidential
summaries of our exclusive listings by simply using the "Businesses
For Sale" button. VR non-confidential summaries show
our profile #, a description of the business, a summary of
financial performance, the reasons why we think it may be
a good opportunity and the asking price. We recommend that
at this point you focus on the business and not on its financial
performance or price. It's far more important now to find
a business type you'd enjoy owning.
Focusing on a few: Digging Deeper
At this point in your search, you'll find yourself holding
one or more non-confidential summary sheets for businesses
you want to know more about. This "digging deeper"
step takes your business opportunity search to a new level.
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. You obtain a copy of these documents by selecting the
“Non Disclosure Agreement”
button and then printing the documents.
The Business Profile: The Facts, & More
A big part of our job on behalf of the Sellers we work with
is to do the work of selling their business while affording
them the time to run their business. This means that we will
work with you to answer your questions about the business
before we introduce you to the Seller. We accomplish this
in several ways.
The most important element in this process is the VR Business
Profile. This report on the business you're interested in
is written to give you the information you need to decide
whether or not the business is right for you. A typical Business
Profile contains a detailed description of the business, summary
financial data, additional business facts like lease information,
number of employees and much more. 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.
In addition to the Business Profile, VR also makes Digital
Videotapes available to prospective Buyers (viewed in our
offices or available on CD-ROM). These tapes typically include
a tour of the business and an interview with the business
owner designed to answer Buyer questions and to give the Buyer
a feeling for the business and its management. For many of
our client firms, these tapes replace the need for a working
hours tour of the facility.
The Business: Face to Face
After reading the VR Business Profile, reviewing financial
data and seeing the DV tape on the business you’re interested
in, 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 An 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' internal financial
records. The Buyer must understand that their offer is always
contingent upon the Seller proving his or her representations.
Due diligence is costly and time-consuming, and it must be
done only after an agreement on price and terms is 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: Terms, Contingencies & Conditions
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).
And your "Earnest Money" deposit check in the amount
of 10% of the offered price. This check is not deposited unless
and until all of the contingencies and conditions of the Offer
To Purchase have been met. After that, your check will be
cashed upon the opening of escrow.
Due Diligence: Clearing The Way. 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
the 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 Finally, the big day arrives and you open
the doors of your business for the first time. There is no
bigger thrill, no better feeling than knowing that you are
in control of your destiny.
When you work with VR, we guide you along the way and help
make your transition to business owner stress free and simple.
So, now is the time to go back to our "Search
Businesses" section and get started on your search
for your part of the American dream.
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