Acquiring A Business
There are currently 24 million family-owned businesses nationwide that employ over half of the civilian workforce. Owning your own business is one of the best ways to control your own destiny and accumulate wealth. In fact, it is estimated that over 80% of the millionaires in the United States are business owners.
Acquisitions of existing businesses are at an all time high due to the immediate high returns and established business operations. Individuals, Corporations and Financial Buyer Groups are all actively searching for existing businesses as a primary source of income and stability or to diversify their investment portfolios to balance the volatility of other equity investments. It is usually much safer and more profitable to buy an existing business than starting a new venture. According to the Small Business Administration, over 50% of startup businesses fail due to unproven concepts, lack of working capital, and poor management.
Buying a business is a serious undertaking and should not be taken lightly. Working with professional advisors is the key to successfully finding and purchasing a business. Seek out an experienced business intermediary who can assist you in finding a business and coordinate the sequence of events.
When you meet with an intermediary, be prepared to discuss your background, work experience and financial ability to purchase a business so that he or she 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 brokers, sellers, lenders, landlords and others who will be a party to the business acquisition.
Based on your qualifications and acquisition criteria, your intermediary will review businesses with you that align with your stated interests. Profiles that provide a summary of the business and financial information will be provided after you sign a Confidentiality Agreement which is required by the Business Owner and the Broker.
After reviewing the information on the business profile, your intermediary will answer any questions you may have about the business or will obtain the answers from persons deemed reliable.
You should now be ready to begin the process of making an offer and entering into a due diligence period. Your intermediary will assist in the writing of a Purchase Contract that can be presented to the seller. Upon the sellers acceptance of the offer you will enter into a due diligence period where you will be given an opportunity to examine the business as thoroughly as you desire. During the due diligence period, your intermediary will coordinate your request for documents and assist in arranging meetings with related parties to the transaction including the business owner's professional advisors, the landlord, lenders and others as needed. All appointments must be coordinated with the seller and must not interrupt his employees and day to day business. The confidentiality of the transaction must remain in tact during this period. If institutional financing is required, your intermediary can usually recommend various lending sources depending upon the type of financing needed.
When you have completed your due diligence and are satisfied with all aspects of the business, its time to release all contingencies and place the transaction in escrow. After a few short weeks you will close the sale and become the new owner with all of its rights and responsibilities. To contact a professional to assist you in your search for the right business, please click here.