Step By Step Business Buying Guide
Buying a Business is a Big Decision
Finding the right business that fits your unique personality, life style, and financial expectations is important. The selected business should allow you to apply previous experiences and skills to improve the business in some way.
And, the business you consider buying should be one that fits your goals, that you can afford with the down payment you have available, and should be a business that can deliver to you the cash flow (salary) you need, in addition to the business being able to pay it's own expenses, as well as being able to generate enough income to pay the principal and interest payments on your acquisition loan.
The chosen business should also deliver to you a Return On Investment that is superior tothe ROI you might receive from stocks, bonds, savings, CD's or other investments.
The steps in buying a business include:
Step 1: Talk with ABMI and discuss your goals. This will provide us with an overview of your interests, talents, and resources. Many of our buyers find this first step a great way to crystallize their thoughts and ideas in regards to chasing their dream. The first step in finding your "ideal deal" is to identify what that means to you.
Step 2: Meet with a consultant at ABMI for an initial opportunity assessment. The goal of the initial meeting is to understand your situation more thoroughly. This meeting will involve a review of your background and resources, your interests, goals, and expectations. To arrange a no obligation, no cost appointment, you may phone ABMI at 913-341-6300 or register with this ABMI web site, and we will then contact you.
Step 3: Your ABMI consultant will discuss potential business opportunities (in general) that may fit your profile based on the preliminary assessment.
Step 4: You may select specific businesses that you want additional information on, from the many businesses ABMI currently has listed for sale. ABMI will provide you with complete packages of information on each business that is of interest to you, including the business financial records (including an analysis of the cash flow of the business), a list of the assets that go with the business, a narrative that explains the business and it's history, photos of the business, and other data that will fully inform you of the "basics" of the acquistion. To protect the confidentiality of the seller you should be prepared to sign a confidentiality agreement stating that you will keep the information presented confidential.
Step 5: Once you have reviewed the detailed business information, you may want to work with your ABMI consultant to schedule a meeting with the seller. We have found that face-to-face meetings between buyer and seller facilitated by the ABMI agent/consultant are the best way to exchange information about the business. At the meeting with a seller, the buyer is encouraged to ask the seller anything the buyer wants to know about the business.
It is not unusual to have more than one meeting with the seller to get a good sense of the true "character" of the business.
Step 6: If you decide the business is a fit, you may work with your ABMI consultant to write up an Offer To Purchase Agreement, including contingencies and conditions, such as making your Offer conditional upon successfully obtaining the financing needed for the acqusition, and conditional upon approval of your attorney and accountant, and conditional upon your arranging a lease on the premises that is satisfactory to you, and conditional upon the equipment of the business being provably in proper operating condition before you take over ownership, and conditional upon other reasonable due diligence issues, all of which must be satisfied before you are expected to finish buying the business. Having brokered the sale of thousands of different businesses, and with almost thirty years of experience in helping buyers buy businesses, ABMI can draw on this experience to help the buyer and seller in the Offering process.
Step 7: Your ABMI consultant will help negotiate the price and terms with the seller. It is not unusual for the first offer to be countered by the seller. The process is similar to buying a house in the way negotiations can go back and forth between buyer and seller a few times before agreeing on the final terms.
Step 8: Once the agreement is accepted by both parties, there will be a period of time that you will be allowed to take a very close look at the business to validate that all representations made by the seller are correct. The process is referred to as Due Diligence.
This is also the time that financing arrangements (if needed) will be made. Your ABMI consultant will help you with this process, and provide you with information on preferred lenders that we have worked with on business loans in the past.
ABMI has specialized in providing financing assistance to buyers on thousands of successfully completed acquisitions over the last almost 30 years. This financing assistance is provided by ABMI at no extra cost to the buyer, as an accomodation.
Step 9: Your ABMI consultant will help you complete the other Due Diligence steps that should be taken including completing the Bulk Transfer provisions of the Uniform Commercial Code, which, with the cooperation of the seller, verifies that there are no unpaid accounts payable of the business. And, ABMI volunteers to consult with your attorney and accountant and other advisors to insure that you receive the benefits of moving along in an informed manner, with low risk.
Step 10: As the date of closing approaches, the legal documents to transfer ownership will need to be prepared. ABMI can assist by our managing the production of the final documents needed. Using seasoned attorneys that we have worked with before has proven to save buyers thousands of dollars in legal fees. Of course, all documents have to be approved by the attorneys for the buyer and seller, so neither party is denied ample legal advice.
Step 11: The time to complete the transaction varies from situation to situation. In typical transactions the process takes 60 to 90 days from the date the Offer is signed by both parties.
Step 12: Finally, your hard work and perseverance pays off. Closing day is here. The closing meeting usually involves both buyer and seller and the closing can be held by ABMI in the Executive Conference Room at the ABMI Overland Park headquarters, or at the offices of the buyer's or seller's attorney, or at the buyer's bank.
You are now the proud owner of your own business, and are now embarked on your own personal entrepreneurial journey!
To arrange the first step (an appointment to discuss how you might find your "ideal deal"), you may phone ABMI at 913-341-6300, or register with this ABMI web site and we will then contact you.