Buying a business: It's a difficult process!
We can connect you with businesses for sale in Southwest Florida and beyond, from Tampa, Sarasota, Port Charlotte, Cape Coral, Ft. Myers, and Naples through Marco Island, as well as Miami and Orlando.
If you are looking to buy a business with VR Business
Brokers this page will help you through the process.
Are you
serious about buying?
Many buyers would like to buy a
business. Only a small percentage will buy a business.
Our role as a business broker is to quickly try and
determine if you are serious about buying a business within
the next 60 to 90 days. It is okay to search the
listing inventory and look at businesses but we are trying
to determine if you are serious about buying today. We
are going to ask you to complete a Buyers Profile, Non
Disclosure, Financial Statements and a Resume. Most
buyers do not want to complete this information - they want
to look at the business financials right away. Serious
buyers will complete this process and have most of it
already prepared.
Understanding
how much you want to earn and pay for a business?
Businesses are typically valued on cash
flow. The businesses we have for sale in Naples, Fort
Myers, Port Charlotte and Marco Island are primarily valued
on the amount of cash that the business is producing for the
existing owner. You can assume for every dollar that
you wish to earn you can spend between two dollars and three
dollars to purchase that cash flow. In some cases
where there is land, inventory or large asset values the
cost per dollar may even be higher. If you do not have
to work in the business the price may even be higher
(absentee run). Assuming that you wish to make $100,000 per
year you can expect to pay $200,000 to $300,000 for a
business producing this cash flow. If you are
financing your purchase then you will have to pay the
financing costs out of the $100,000 until the loan is
repaid. Since
you're on our web site already you can see non-confidential
summaries of our exclusive listings and many others by simply
using the "Find a Business"
button.
What kind of
business do you want to own?
This is a difficult decision. In most
cases doing something you know and understand is important.
In many cases we realize that this may be your first
business that you will own or it may be in a different field
than you previously worked in. Sometimes it is easier
to rule out certain areas - do you want to run a restaurant,
retail - these are large categories and may quickly rule out
many of the businesses currently for sale.
Become a smart
buyer?
This simply means ask some very simple
questions of the business broker trying to sell you the
business. The more knowledgeable you are the better the
experience you will have purchasing a business.
-
What multiple of Owner Benefit are you
using to value the company?
-
Are these records provable on tax returns
and company financial statements?
-
Are the revenue/earnings still trending
appropriately year to date versus last year?
-
Are there any additional add backs that
you use to calculate the Owner Benefit?
The Business
Profile: The Facts, & More
A large part of our job is to do the work
of selling while affording our Sellers the time to run their
business and not have to deal with “tire kickers”
and nosy competitors. We will work with you to answer many
of your questions about the business before we introduce you
to the Seller. We answer questions in several ways.
An important element in this process is the
Business Listing Information (BLI) sheet. The BLI's
are written to give you the information you need to decide
whether or not the business is right for you. A typical BLI
contains a detailed description of the business, summary financial
data, and additional business facts like lease information,
number of employees and much more. After reviewing the Business
Profile and discussing it with your VR representative, you
will have a pretty good understanding of the business and
its operations.
The Business:
Face to Face for the First Time
After reading the BLI and asking questions
you are ready to tour any businesses that are still of interest.
Touring benefits both you and the owner. You will learn about
the business from the person who knows it best. You will also
have an opportunity to sell yourself if the Seller is offering
financing. After touring the businesses you should be prepared
to make an offer within a few days.
Making An Offer:
Let the fun begin!
Making the offer is not a final step. In
fact, it should be viewed as the first of several steps, each
of which bring you and Seller closer to completing the transaction.
Because these are privately held businesses, you will need
to make an offer before seeing and discussing the Seller's
internal financial records. You need to understand that an
offer is always contingent upon the Seller proving his or
her representations during due diligence. Due diligence can
be costly and time-consuming. Thus it is done only after an
agreement on price and terms has been reached.
It is the Seller's responsibility to prove
everything to you, the Buyer. Put another way, your contract
to buy the business is not binding until you have completed
your due diligence and signed that all contingencies have
been removed.
Terms:
Price, down payment and agreed-to financing (interest rate,
number of payments, etc.).
Contingencies:
Approval of books and records, equipment, inventory, assignment
of leases (or securing a new lease) or loans and any other
items that you and the Seller incorporated into the structure
of the purchase contract.
Conditions:
Non-compete clauses, consulting agreements, training agreements
and other conditions embedded in the agreement.
An "Earnest Money" deposit check,
typically 10% of the offered price. Your check will be deposited
in our non-interest bearing escrow account or with the Closing
Attorney. The money returned to you in full if the contingencies
cannot be cleared.
Due Diligence:
You will have a specified period of time (typically 10 working
days) to complete your due diligence (e.g., to investigate
all aspects of the business) and to remove all contingencies.
When due diligence has been completed and all contingencies
have been removed, the contract becomes binding. Should the
business fail to pass due diligence, you are free to rescind
or amend your offer or have the full amount of the deposit
returned.
Financing:
Working with Sellers, Lending Institutions and the SBA
Almost every deal requires some form of financing.
VR will help you to obtain financing. Often, this means offering
a Note to the Seller or a bank loan guaranteed by the Small
Business Administration. Your resume, credit check, IRS tax
returns and references will all be required by the Seller
and/or lending institutions.
Closing
Attorney. Performs Many Duties
After the Closing Attorney receives signed
instructions from you and the Seller authorizing Closing,
he will perform a lien search on the business and begin preparing
the closing documents for Buyer and Seller's review.
The documents include the closing statement, purchase money
note, security agreement, consulting and/or training agreement
and non-compete agreement.
What Do
I Do While Waiting to Close? You still have a lot of
work to do!
Your “to do” list will include
incorporating, posting a fictitious name for your business
and securing a federal tax number. These steps will enable
you to open business and banking accounts and to complete
other important steps. VR will guide in this process.
Closing Day.
You're In Business. 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 own destiny. You have achieved the American
Dream . . . to own your own business.
When you
work with VR, we will guide you and help make the transition
to business owner as stress free and simple as possible.
Now, it's time to go to our "Find a Business"
section to take your first step towards achieving your dream.
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