How to Buy a Business Step By Step
Steps Buyers Need to Follow to Buy a Business
Every buyer must go through multiple steps to buy a business. Below is a list of steps each buyer must follow:
- Buyer contact First Choice Business Broker on a business he/she is interested in. It is important to include the full name and email address when contacting the broker. It is important buyer let the broker know all the potential parties that will review any confidential information on an interested business.
- Broker will send the buyer an NDA and profile to fill out via DocuSign for electronic signature.
- Buyer must fill out a profile and sign an NDA. Buyer will get both documents via DocuSign for electronic signature. Below is a video on how to sign documents via DocuSign if assistance is needed.
- If the buyer is a potential right fit for the business, the buyer will receive a more detailed profile of the business.
- After reviewing the profile, the buyer should prepare to make an anonymous visit to the business to make sure it is the type of business he/she is looking for.
- Buyer to prepare a list of initial questions for the broker/seller based on all the information gathered.
- Buyer to work with broker on offer to purchase the business. In the offer, buyer can specify financing terms, the number of days for due diligence, non-compete clause, training, initial deposit, and other offer terms.
- Broker to present the offer to the seller.
- If the seller accepts the offer, buyer to put an initial deposit into a 3rd party escrow account.
- Buyer will start due diligence process. Seller will provide all the documents buyer is looking for during this process. Some examples of due diligence documents: 2 years of tax returns, 2 years of P&L, 2 years of balance sheet, a copy of the lease, and others.
- Buyer to work with the seller to address all open issues.
- Buyer to start the financing process if needed. If SBA loan is required, buyer to provide all the documents to the SBA bank.
- Once financing contingency is removed, escrow process is to start.
- During the escrow process, the buyer can work with the seller to talk to the landlord about taking over the lease, etc.
- Once escrow process is over and the buyer is satisfied with everything, remaining fund of the purchase price is to be deposited into the escrow account.
- Buyer and seller pick a day to count the final inventory. Buyer can either pay the seller outside the escrow for the inventory or deposit the amount for inventory into escrow.
- Escrow is closed and the buyer is officially the new owner of the business.
- Seller train the buyer per the purchase agreement.
- Buyer and seller can make additional arrangement for training and consulting if needed beyond the training period.