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Searching for a Business to own….

Did you know that over 80% of the millionaires in the world own their own business? Individuals, corporations and financial buyer groups are all actively scouring the world for existing businesses. It is usually much safer and more profitable to buy an existing business than starting a new venture. Over 60% of all startup companies fail due to unproven concepts, lack of working capital, and poor management in the first three years. On the other hand an existing business that is purchased by a new owner shows a minimal failure rate and over 90% of franchises are still successful after 10 years!

Advantages To Acquiring Existing Businesses

Some of the advantages in acquiring existing businesses include:

Being able to review a company's existing track record can be very helpful in determining expansion plans. Growth potential can be measured based on actual experience rather than conjecture associated with startup ventures.

The need for additional working capital is reduced due to the immediate cash flow being generated by the acquired company.

Obtaining skilled employees who are familiar with the business operation and market.

Gaining established customers significantly reduces the time it would otherwise take to attract an adequate number of customers to support the overhead of a new operation.

Obtaining existing licenses and permits can often reduce the time and cost of making application, gathering information and conforming to required regulations.

Sources of capital to purchase existing businesses are more readily available than startup ventures. It is very common for the owner of an acquired business to finance part of the purchase price.

The Sequence of Events

Investing in a business is serious business and should not be taken lightly. Working with professional advisors is the key to successfully finding and owning a business. Friends and well meaning relatives are not usually qualified to provide the specialized advice needed for a business acquisition. Seek out a Sunbelt business transfer specialist who can assist you in finding a business and coordinate the sequence of events.

Finding A Business To Buy

While there are a number of ways to find businesses for sale, utilizing the services of a professional Sunbelt business transfer specialist can greatly expedite the process. Business transfer firms are sometimes referred to as the “Supermarket" of businesses for sale. Sunbelt is the World's largest as we have over 9,000 companies to select from in the world. Sunbelt has gas stations, hair salons, construction companies, law firms, grocery stores and many more different types of companies looking for new owners.

Self Assessment

When you meet with a Sunbelt business transfer specialist, be prepared to discuss your background, work experience and financial ability to invest in a business so that they can help you find a business that meets your needs. You will need to prepare a personal resume and financial statement which will be required by lenders, landlords and others who will be a party to the business acquisition. The following are examples of the questions a Sunbelt business transfer specialist will be asking you.

A. Why do you want to own a business?
B. What are your special skills and educational background?
C. What is your work and/or business ownership experience?
D. What are your hobbies and areas of special interests?
E. What is the maximum amount of your risk capital you can invest as a down payment?
F. If you have an equity partner/investor, how much do you expect them to invest of their personal funds?

Define Your Acquisition Criteria

A. What business categories are of most interest to you?
- Service  
- Retail  
- Wholesale/Distribution
- Manufacturing
- Restaurant/Fast Food
...

B. Is there a specific type of business that you are interested in owning?
C. If you are not sure of the type of business you want, are there any businesses you do not want to own?
D. What is your preference for the location of a business?
E. How far are you willing to commute for a good business?

Review Businesses For Sale

Based on your qualifications and acquisition criteria, a Sunbelt business transfer specialist will review with you several businesses that meet your needs. Profiles that provide a summary of the business and financial information will be provided after you sign a Confidentiality Agreement, which is strictly required by the Sunbelt business transfer specialist for the owner's behalf.

Meeting The Business Owner and Touring The Facilities

After reviewing the information on the business profiles, a Sunbelt business transfer specialist will answer any questions you may have about the businesses or will obtain the answers from persons deemed reliable. Once you select those businesses that you believe best meet your investment criteria, the Sunbelt business transfer specialist will schedule appointments with the business owners so you can see the facilities and operations.

The Sunbelt business transfer specialist will attend these meetings to introduce you to the business owner, facilitate the flow of information and provide guidance with regard to completing an earnest money agreement and the due diligence process.

When meeting with a business owner, you will be able to tour the facilities and ask questions regarding the operations of the business. It is best not to discuss the price and terms of sale with the business owner. The Sunbelt business transfer specialist will be able to explain the basis on which the business was valued and the terms of sale required by the owner.

Please remember to keep all proprietary information you obtain about the business confidential. Only discuss this information with your professional advisors and spouse, and remind them that the information is confidential and not to be disclosed to other parties. In most cases, the employees, customers, suppliers, landlords and lenders are not aware that these businesses are for sale. Premature disclosure could have a negative impact on the business being sold. Unlike the sale of real estate or franchises, the sale of an on-going business is very confidential.

Due Diligence and Offering Process

At this point you have reviewed operating information and financial summaries of the businesses that meet your acquisition criteria, and you have met with the business owners and toured their business facilities. You should now be ready to select the business that you feel best meets your needs and begin your due diligence process. Checking out the business can be very time consuming for both you and the business owner.

Furthermore, costs may be incurred for such things as professional advisors, copies of documents, lien searches and closing documentation. The business owner does not want to go through a detailed due diligence process without knowing the buyer is serious and willing to make an acceptable offer to purchase the business. Therefore, before copies of tax returns and other business documents can be obtained and before any contact can be made with landlords, bankers, suppliers, employees, or customers, an “Letter of Intent” must be presented and accepted by the business owner. The basic steps are:

A. The Sunbelt business transfer specialist will help you complete the “Letter of Intent” and Escrow Agreement. This paperwork provides the terms and conditions under which you are willing to invest in the business and the seller is willing to sell the business. Final closing documents, such as a bill of sale, note and security agreement, closing statements, non- compete agreements, leases and approvals from various parties will be handled by the Escrow Attorney prior to closing.

B. The amount of earnest money required to be submitted along with the Earnest Money Agreement will depend upon the size of the business transaction. The amount needs to be sufficient to show your serious intent to buy the business and to encourage the seller to take the business off the market while you complete your due diligence. For most small to midsize businesses, earnest money of 100,000- 200,000 baht is typical. If any of your requirements in the agreement are not met to YOUR satisfaction after due diligence, the escrow funds are 100% refunded to you.

C. The Sunbelt business transfer specialist will assist in the negotiations between you and the business owner to secure an Earnest Money Agreement that is acceptable to all parties.

D. The Standard Earnest Money Agreement gives you 15 to 30 days to complete your review of the business financial documents, operating agreements, property leases and other aspects of the business after the agreement has been approved by you and the business owner.

E. During the due diligence period, the Sunbelt business transfer specialist will coordinate your request for documents and assist in arranging meetings with related parties to the transaction including the business owner's professional advisors, your professional advisors, the landlord, lenders, the escrow attorney and others as needed.

The Closing Process

When you have completed your due diligence and are satisfied with all aspects of the business, you will authorize an escrow attorney to conduct lien searches and prepare the bill of sale and other closing documents for all parties to review. After the closing documents have been approved by the principals, a closing date will be scheduled. A cashier's check will be required at closing for the amount due. The Sunbelt business transfer specialist will coordinate with the principals and their advisors, landlord, lender, and others, to insure that all the necessary paperwork is completed by the closing date.

Investing in an existing business can be a wise choice for entrepreneurs who desire to have their own business. A proven track record, skilled employees, established customers and suppliers, is to your advantage. Utilize the services of a Sunbelt business transfer specialist today to help you fulfill your dream” ... owning a successful business of your own.

 

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