How can a business broker help me buy a business?
A business broker can help you identify the available opportunities currently on the market based on your criteria. They are able to sift through the opportunities that may already be “under contract” or have characteristics that would not make them a good fit for your situation. Additionally, if there are very few opportunities on the market in your desired industry or location, a business broker can begin a search to find business owners interested in selling, but who are not currently listed for sale. A business broker will also be the one who helps facilitate the transfer of information between you and the seller from NDA to the closing.
What information will I need to provide to be able to see information on a business that is listed for sale?
Almost every business owner is concerned with the general public and/or competitors finding out that they are for sale. For that reason, business for sale listings contain only enough information to help a buyer decide if it fits with their basic criteria (i.e. price, cashflow, industry, general area). To move beyond the publicly available information, you will need to provide proof of identity (driver’s license) and sign a non-disclosure agreement. Depending on the type of business you are interested in, you may be required to provide a financial statement and buyer qualification information to ensure your ability to purchase a business in a specific price range and/or ones that require a certain skillset/licensure.
Should I hire an attorney and/or an accountant if I want to buy a business?
No one ever said buying a business was easy. Since a transaction can involve complicated information, we always recommend that a buyer assemble a team of professionals; which would include attorneys and accountants.
I'm a resident of another Country and interested in obtaining an E-2 Visa. Can you help in this process?
The E-2 process can be complex, and the good news is that FBX has worked on a number of successful E-2 transactions. We always encourage candidates to seek the counsel of a qualified immigration attorney, while working with their FBX team member on finding the best investment business for their application needs.
What are the costs to buy a business?
Generally speaking a buyer should expect and be prepared to pay for the following items when buying a business: the purchase price or at least the required down payments if financing is involved, due diligence expenses such as attorney’s and accountant fees, closing costs, insurance expenses, and deposits (lease, power, water, phone, internet, etc.…) The fee to FBX is generally paid by the seller at closing.
Where is a good place to look for businesses that are currently for sale?
FBX has a great database of the current, active business for sale listings on their website, www.fbxbrokers.com. If you don’t find what you are looking for there, contact an FBX team member who can provide you with a customized search and set you up with regular updates on new businesses that come on the market.
How do I know if the financial figures stated by the seller is true and accurate?
FBX strongly encourages a buyer to independently verify the business financials as part of the “due diligence” phase of the acquisition process. We recommend using a CPA who is skilled in the “due diligence” process to help review and verify the seller’s financials.
Is there any training or transition assistance offered by the seller to help me learn the business?
While the time frame can vary from business to business, you should be able to expect a seller to provide between two and four weeks of training at no additional cost. For more complex businesses, the seller may offer additional training, or it can be a point of negotiation.
What’s the least amount of money I should have available to buy a business?
Prices of businesses can vary greatly, However, in the small business market, you need to have at least $20,000 to $25,000 for a down payment on a business in the $40,000 price range. As the purchase price increases, so does the amount of money you need to make the deal happen. Keep in mind, you will also want to have money available for expenses (i.e. working capital) until you have identified the cashflow of the business.
How available is financing if I don’t have enough funds to cover the entire purchase price of the business?
Some businesses may require the entire purchase price to be paid in cash. In those instances, lender financing or a cash purchase would be required. The availability of lending for the purchase of a business depends on the credit worthiness of the buyer, the financial needs of the buyer, the quality of the financials of the business being acquired, and the ability of the business to cover its normal expenses along with the loan payment and still be able to pay the buyer enough money to cover their normal living expenses. FBX has relationships established with several lenders who offer Small Business Administration loan products and can loan up to 90% of the purchase price (SBA and lender policies apply).
Some businesses will be offered with “Seller Financing”. This means that the seller will accept a significant down payment from a buyer and allow the buyer to then make regular monthly payments on the remaining purchase price of the business. This will require the buyer to execute a note with a personal guarantee. This can be a great option when traditional lending may not be the right fit for the buyer, or the business being acquired.