BUYING A BUSINESS FAQs
If you are a prospective business owner, please click on the frequently asked questions below to find answers about buying a business.
What is the next step when I find a business that I want to buy?
What happens after I make a purchase offer?
After the terms have been agreed to, the due diligence process starts. This is where the buyer verifies that the seller’s representations are accurate. Also, at the same time, the attorney(s) should begin to prepare the closing documents. Note that many brokers believe that hiring a transaction attorney to draw up the documents, which are then reviewed by both buyer’s and seller’s attorneys, is the most efficient and cost-effective process. Some buyers prefer not to start the legal process until the due diligence has been completed. This may or may not be wise, depending upon the time frame for closing the transaction. The prevailing experience is good deals close quickly and bad deals linger.
If a business does not find a buyer what happens to it?
Are there a lot of businesses for sale?
Why do people go into business for themselves?
- Want to control your destiny and do it your way
- Tired of working for someone else
- Use your skills and talents in a manner that you feel is best
- Make more money than as an employee
The following are additional reasons given in response to surveys:
- Opportunity to enter a family business
- Inheritance of a large sum of money
- Relief from conflicts with employers/take more control of the future
- Response to being laid off or fired
Why buy a business instead of starting a new one?
What type of business should I look for?
A careful analysis of your skills is important identifying a target industry or business. Your background, next to your financial capabilities, is an important consideration when deciding the correct direction for your search.
When you look at a business, you should feel that you can do better than the current owner. If you don’t feel that way, you will likely pay too much for the business.
How are businesses valued?
What does it take to be successful in a small business?
Some reasons why business buyers may not be successful include their lack of willingness to put in the long hours that it can take to make the business successful. Sometimes business buyers are not willing or able to make hard decisions on terminating employees, hiring expensive employees or changing or eliminating products or services. It is important to examine your character traits, training, personality and motivation to determine if you are willing and able to do what it takes to be successful.
Why should I use a business intermediary or business broker?
Do I need an attorney or accountant to buy a business?
Bear in mind that any advisor will have his or her specific point of reference about the transaction. You will have to make decisions. However, when the agreements have been completed, a good way to find out if they are done well is to ask the advisors if they would sign them.