Unless you've bought or sold a business in
the past, you'll find that buying a business can be a
confusing and even trying experience for the unprepared.
That's why it’s important for you to take the time to read
this explanation of the process. Even if you're a veteran in
business transfers, understanding the VR process will assist
you in working with our firm.
The search for a business opportunity almost
always starts with a telephone call or a visit to a web site
like the one we host at VR. Sometimes the prospective Buyer is
a Corporation, Private Investment Group or a sophisticated
Private Investor who has a very definite idea of the type of
business wanted. But, often the Buyer is a first time Buyer
and is still in the formative or exploratory phase of the
search. Many times a Buyer's first question is, "What kinds of
businesses do you have?"
Well, we have lots of businesses, so that's a
tough question to answer without some idea of the Buyer's
resources, skills and needs. Maybe we just listed Ford Motor
Company and you, our prospective Buyer, just happen to have
several billion dollars and a background in automobile
manufacturing. There's a match made in heaven, but it's a
match we can't uncover without questioning you and learning
more about you.
So the first and most important step is
telling us about you. Be patient when we ask, "How many days
per week are you comfortable working?" and "Do you like having
employees?" and "How much cash do you have for a down
payment?" and many other questions. We're not just asking:
We're narrowing your search and saving you time and
aggravation.
After we've talked for a while, we can
probably begin narrowing the search to a few appropriate
business opportunities. At this point, we communicate
non-confidential summaries of our exclusive opportunities to
you in a number of ways. Since you're viewing our web site you
can see the non-confidential summaries of our exclusive
listings by simply using the "Business
Search " button. VR non-confidential summaries show our
profile #, a description of the business, a summary of
financial performance, the reasons why we think it may be a
good opportunity and the asking price. We recommend that at
this point you focus on the business and not on its financial
performance or price. It's far more important now to find a
business type you'd enjoy owning.
At this point in your search, you'll find
yourself holding one or more non-confidential summary sheets
for businesses you want to know more about. This "digging
deeper" step takes your business opportunity search to a new
level.
This new level is one of mutual trust and
obligation between you, VR and the Seller(s) of the
business(es) you're interested in. Now you're being exposed to
the specifics about the businesses you've been considering and
your agreement to keep this information confidential is
required. Before we send you confidential information, we
require you to send us your Buyer Profile and we require you
to sign a Non-Disclosure and Confidentiality Agreement. When
you return these documents to us, we'll divulge to you the
name and address of the business you're interested in. You
obtain a copy of these documents by selecting the “Non
Disclosure” button and then printing the
documents.
A big part of our job on behalf of the
Sellers we work with is to do the work of selling their
business while affording them the time to run their business.
This means that we will work with you to answer your questions
about the business before we introduce you to the Seller. We
accomplish this in several ways.
The most important element in this process is
the VR Business Profile. This report on the business you're
interested in is written to give you the information you need
to decide whether or not the business is right for you. A
typical Business Profile contains a detailed description of
the business, summary financial data, additional business
facts like lease information, number of employees and much
more. After a thorough review of the Business Profile and
discussions with your VR representative, you will have a good
understanding of the business and its operations.
In addition to the Business Profile, VR also
makes Digital Videotapes available to prospective Buyers
(viewed in our offices or available on CD-ROM). These tapes
typically include a tour of the business and an interview with
the business owner designed to answer Buyer questions and to
give the Buyer a feeling for the business and its management.
For many of our client firms, these tapes replace the need for
a working hours tour of the facility.
After reading the VR Business Profile,
reviewing financial data and seeing the DV tape on the
business you’re interested in, you should be prepared to make
an offer for the business. If not, your VR representative will
answer further questions and may, if indicated, set up a
meeting with the business owner prior to your making an offer.
This is an important step. Not only are you learning more
about the business from the person who knows the most about
it, you are also seeking to tell the business owner as much
about you as possible since you may be seeking installment
terms from the business owner. Often, Buyer credentials are
presented at this time.
After meeting the business owner and touring
the business, the next step is making an offer for the
business. Making an offer is not a final step. In fact, it
should be viewed as the first of several steps, each of which
bring the Buyer and Seller closer to completing the
transaction.
Since this is a privately held business, the
Buyer is obligated to make an offer before seeing the
business' internal financial records. The Buyer must
understand that their offer is always contingent upon the
Seller proving his or her representations. Due diligence is
costly and time-consuming, and it must be done only after an
agreement on price and terms is reached.
It's the Seller's responsibility to prove
everything to the Buyer. Put another way, your agreement on
price and terms will be "non-binding" until you've had the
opportunity to see all financial records and we have removed
all contingencies.
Terms:
Price, down payment and agreed-to financing (interest rate,
period, etc.). Contingencies. Approval of books and records,
equipment, inventory, assignment of leases or loans and any
other items that the Buyer requests to be incorporated into
the structure of the agreement.
Conditions: Non-compete
clauses, consulting agreements, training agreements and other
relevant parts of the structure of the agreement.
Your
resume of business background and experience.
Your
financial statement.
Your credit report (paid for by you).
And your "Earnest Money" deposit check in the amount of
10% of the offered price. This check is not deposited unless
and until all of the contingencies and conditions of the Offer
To Purchase have been met. After that, your check will be
cashed upon the opening of escrow.
Due Diligence: Clearing The
Way. You and your advisors - attorney, accountant and others -
will have a specified period of time to complete your due
diligence and remove the contingencies (typically 10 days).
When due diligence is complete and the contingencies are
removed, the contract is binding. Should the business fail to
pass due diligence, you are free to rescind or amend your
Offer To Purchase.
Almost every deal requires some form of
financing. At VR we work with Buyers to help obtain the
appropriate financing for the business being purchased. Often,
this means a Seller’s Note and it also often means a bank loan
guaranteed by the Small Business Administration. But whatever
the financing requirements, Buyers can expect guidance and
assistance from VR in this important area.
Escrow typically takes about 3-4 weeks. After
escrow receives the signed instructions, the escrow officer
will contact government tax agencies for clearance and publish
your fictitious name filing, enabling you to open business and
banking accounts. Also during this time a Notice To Creditors
will be published allowing anyone with a claim against the
business to step forward.
Congratulations. Finally, the big day arrives
and you open the doors of your business for the first time.
There is no bigger thrill, no better feeling than knowing that
you are in control of your destiny.
When you work with VR, we guide you along the
way and help make your transition to business owner stress
free and simple. So, now is the time to go back to our "Business
Search"
section and get started on your search for your part of the
American dream.
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