It’s a new era in the realm of buying a business
Those who have never bought or sold a business will likely find the process to be confusing. Even those who have experience in the world of mergers and acquisitions, or M&A, or are seasoned corporate veterans will find that buying a small business is a “new ballgame.”
Whether you are new to buying a business or are a veteran in business transfers, Hines & Associates can put our deep understanding of the process to work for you.
We Help You Unravel the Questions
Searching for new business opportunities usually begins with a call or perhaps a visit to an Internet site. Often a prospective buyer is a corporation, an equity group or even a private party.
Interested parties quite often already know what kind of business they want, but not always. First time buyers may even ask us what kind of businesses we have available. The answer is, of course, that we have many businesses for sale. But it isn’t so much a question of what kind of businesses we have available, as it is which business is the right fit for you.
Many questions must be answered in determining what business is the right fit. Questions ranging from how many hours a week you want to work to how much cash you have for a down payment and much more all must be factored into the equation. The right information helps us narrow down the search and provides you with the best options.
We Help You Achieve Focus and That Means Results
In the beginning of your search, you’ll likely find yourself looking at several non-confidential summary sheets for businesses. Finding the right business for you means digging deeper and taking a closer look.
Facilitating a deal means that there must be mutual trust between three parties: you, Hines & Associates and the seller(s) of the business(es). This process means that you will be given access to confidential information. That is why we require you to send us your Buyer Profile and why we have you sign a Non-Disclosure and Confidentiality Agreement.
Once these documents have been returned to us we can disclose vital particulars, such as the name of the business, its address and other information. It is important to note that when you do sign a Non-Disclosure Agreement, you must keep all disclosed information 100% private. Additionally, you are also agreeing that you will only contact the owner through us and with our expressed permission. Violations of this bond are taken very seriously.
The Facts of the Business Profile
Our sellers are extremely busy running their businesses. We work closely with them so they can stay focused on the day-to-day operations of their businesses. That means we’ll also work closely with you to answer the questions you may have regarding a given seller’s business. It truly is a win-win-win.
There are many ways that we help facilitate the sell of businesses. One of the most important tools in the process is the Hines & Associates Business Profile. It is through this report on a business that you’ll gain the information you’ll need to determine whether or not a business is a good fit for you.
A typical Business Profile will contain such key information as: business description, financial data, and a range of relevant business facts, such as number of employees, lease information and a significant amount of other information. Once you have reviewed this detailed and comprehensive information with your Hines & Associates representative, you will have a good understanding of both the business as well as its operations.
Another very valuable tool Hines & Associates offers are digital videotapes. These tapes are available to prospective buyers and can be viewed exclusively in our offices. It is through these tapes that you can receive a digital tour of the business and watch an interview with the business owner. Upon watching, you’ll gain a feel for the business, its management and more. Many of our buyers feel that these insightful, detail-oriented and high-quality tapes can in fact serve to replace the need to work in the business.
Going to the Next Level: A Face-to-Face Meeting
Once learning about a business, if you are interested we go to the next step and arrange of face-to-face. At this stage you should be prepared to make an offer on the business. If you are not ready to make an offer, your Hines & Associates representative will be happy to answer all of your questions and set up a meeting with the owner. It is often at this time that a buyer presents his or her credentials.
After you’ve met the business owner and toured the business, your next step will be to make an offer. It is vital to note that making an offer is not the end of the process, but is instead just the first of several important steps designed to bring the buyer and the seller closer to finalizing a transaction.
Likewise it should also be noted that since you are potentially purchasing a privately held business, you are obligated to make your offer in advance of seeing the business’ internal financial records. Further, you must realize that their offer is continent upon sellers proving their representations. Due diligence is a specified period of time in which the buyer investigates the business. This process is both time-consuming and expensive. That’s why due diligence thus takes place only after there has been an agreement on terms and price.
A Closer Look at the Offer
When you opt to make an offer that offer will consist of the following 8 key elements:
This means approval of the books and records as well as other variables such as loans, equipment, the assignment of leases, inventory and other items that the buyer requests to be incorporated into the final agreement.
Conditions such as non-compete clauses, training agreements designed to help the new owner prepare to operate the business, consulting agreements and other conditions must be agreed upon.
3. Your Earnest Money
Your earnest money is in the form of 10% of the amount of the offered price. The earnest money check is not deposited until the close of the due diligence period and you wish to move forward with the purchase.
4. Due Diligence
Typically 10 days are given for the due diligence period. During that time you and your advisors, ranging from your attorney or accountant, will use this time to perform due diligence and remove the contingencies. Once due diligence is completed and the contingencies are removed, the contract is binding. In the event that the business fails to pass due diligence, you can rescind or amend your Offer to Purchase.
5. Your resume involving your business background and experience is a factor.
6. Your financial statement and your credit report
It is key to note that virtually every deal requires some form of financing. We work closely with buyers to assist them in obtaining financing. It is common for a seller’s note and a bank loan guaranteed by the Small Business Administration to be involved. No matter what type of financing is involved, Hines & Associates provides invaluable and experienced guidance.
8. Escrow and Closing
It is common for escrow to take 3 to 4 weeks. Once escrow receives instructions, the next step is for the escrow officer to get in touch with government tax agencies for clearances and publish your fictitious name filing; this important step enables you to open accounts for banking. A Note to Creditors will also be published. This step enables potential parties with a claim against the business to come forward.
It’s Official: The Business is in Your Name
At this point, big congratulations are in order. The business is in your name and the process is complete. It is a tremendous feeling knowing that you are in control of your own destiny and financial future.
Working with Hines & Associates means that you have a trustworthy dedicated and experienced guide in your corner. We specialize in making the transition to owning a business a trouble free and hassle free process. At this point, we encourage you to visit our “Business for Sale” section and begin your journey to owning your own business!