BUYing A BusinessSELLing A BusinessBUY A Franchise
| | Buy A Business Process1. Non-Disclosure/Confidentiality Agreements
These are required to be signed by the Buyer and are important to protect the Seller from the risk of negative effects of a confidentiality breach.
2. Financial Information and Profile
A buyer information profile is provided to the Seller and includes a completed questionnaire and summary financial statement from the Buyer.
3. Release of Confidential Business Information to Buyer
The summary information describes the business operations and financial performance. Financial information is limited to the details of the calculation of the Seller's Discretionary Earnings (typically for 3 years) and basic balance sheet information.
4. Meeting with Seller and Tour of Facilities
This meeting typically focuses on the Seller explaining his day-to-day role in the business, and responding to any appropriate questions.
5. Contingent Offer Negotiated
The Buyer prepares the offer which specifies the price and terms for the purchase along with any contingencies. Typical Buyer contingencies are full due diligence of business, the Buyer obtaining financing on terms acceptable to the Buyer and if leased space involved, approval by the landlord to assume lease.
6. Full Due Diligence
The Buyer requests all of the information they feel is pertinent to their decision making. Highly confidential information must be treated accordingly. The Seller provides all of the due diligence items that they are able to with an explanation to the Buyer regarding any information that is not available. This information usually includes tax returns, 941s, sales tax reports, bank statements, etc. The Seller will likely request due diligence information from the Buyer as well.
7. Preparation of Closing Documents
The closing documents are drafted and negotiated between the parties. They usually include the Purchase Agreement, non-competes, consulting, lease assignments, etc.
8. Begin the Training and Transition as Agreed to in the Closing Documents.
The new owner takes over the business and begins operation with the assistance of the Seller.
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