Buying a business – some common sense advice
At ABMI, we specialize in helping our clients sell their businesses. The clients we represent operate businesses which are proven, profitable and efficiently run.
Buying a business can be a complex and time consuming process. To avoid the frustration of wasting time and money, we provide this brief guide to help you travel smoothly through the sales process.
1. Be clearly focused
Know what you are looking for. Have a plan. Focus on your key skills and look for businesses that can complement your strengths and future goals. Sellers will quickly dismiss you if they think you are a time waster or tire kicker. The perfect business might not exist and you may have to compromise on what you are looking for. Do your homework before you go looking.
2. Do you really want to buy a business?
How serious are you about buying a business? Is it a pipe dream because you are bored in your present job, or are you really prepared to spend the time (sometimes up to a year) and money looking for the right opportunity? Do you have the support of your family? Can you see yourself working hard to make your purchase a success? Do you know what is involved?
3. Understand the seller’s motivation
This is vital. Why is the business for sale? Do not be afraid to ask this question directly. How committed to selling are they? What will the owner do after the sale? You need answers to these questions in order to assess the business properly.
4. Get enough information/Asking questions
You need as much information as possible to help you assess and understand the opportunity. This needs to be balanced against the business owner’s need to maintain confidentiality. Do not be put off by having to complete a confidentiality agreement or non-disclosure agreement. You will not get far without one. Ask questions and gather as much insight as you can.
Do not expect to buy a business without financing or cash. ABMI can find and negotiate great deals, but you will need financing in order to complete a transaction. Do not get offended if you are asked to provide proof of funding ability. A seller will want to make sure you are serious. ABMI will help you work through your budget and assist you with financing.
6. Presenting yourself
A seller will look for three main things from you if you are to be taken seriously: Can you finance a transaction? Do you have the ability or skill set to run the business? Will you get along with the current owner? To get ahead of the game, update your CV, prepare a personal profile, assemble an acquisition brief and know what you want to achieve.
7. Understanding ABMI’s role and how we can actually help you
ABMI will be with you every step of the way to help facilitate a transaction. Do not get upset when asked to provide information about yourself and your finances, or to fill in a confidentiality agreement. These are in place to protect the seller’s interests. ABMI will be managing the entire sales process and we may be talking with many interested parties. Do not be afraid to ask questions and seek guidance on the best way to approach the transaction. Be honest and upfront, and we will do everything we can to help you.
8. Do not contact the seller directly
Unless you are given the go-ahead by the seller or an ABMI Team Member, you should not contact the seller directly. This is is critical so that you do not compromise the confidentiality of the seller. Respect this or you will not get very far in your attempts to purchase any business.
9. Making a decision
It is only courteous to let everyone know as soon as you’ve made a decision – either way. Provide feedback to ABMI and let us know if a particular business is not for you. We may be then able to help find you something more suitable.
10. Do not be afraid to make an offer
Offers can be made subject to contract and due diligence. If you like the business and you feel as though it is the business for you, make an offer – state your interest. You are not obligated. ABMI Team Members will be more than happy to help you through this process.