The Buying Process

For a first time buyer the process may seem a little daunting but the process usually unfolds as follows:

•            The buyer sees an opportunity on line and makes an inquiry.

   
•            The listing party will usually be a business broker, but may be a real estate agent or the owner of the business. Buyers are sometimes confused as to the difference between a business broker and a real estate agent.   Basically, a business broker sells only businesses and any land or buildings that are owned by the business being sold.   Real estate agents usually sell homes or commercial buildings not associated with a business. Occasionally a real estate agent will list a business.

   
•             If the listing is with a business broker, you will usually be asked to sign a non-disclosure agreement. This agreement requires you to keep all information provided to you about a particular business (including the fact that it is for sale) to be kept confidential. Sometimes you will be asked to provide information about your finances as well. This information is to allow the business broker to evaluate whether you are a viable purchaser for a particular business.

   
•            Once the non-disclosure agreement is signed by you and returned to the business broker, you will be provided with information about the business. How much information you are provided will depend upon the broker.

   
•           You will then be in a position to evaluate the business and ask questions.

   
•            If you decide to make an offer the broker will assist you with the offer and present it to the seller. The seller may then accept the offer, counter the offer with an offer of their own, or turn down the offer.

   
•             If your offer is accepted, you will be required to put down money to show that you are serious (earnest money) and most times that money is deposited with an escrow company (escrow is opened).

   
•             The due diligence (inspection period) then begins. During this period, the buyer will be able to have all of their questions answered and to examine the business to see if it is as it was represented.

   
•            Once the due diligence is completed and all contingencies have been signed off (the buyer is now satisfied with all inspections), the closing date will be set.

   
•            Documents will be signed by the seller and deposited with escrow, the buyer will send all necessary funds to escrow and the escrow company will close the sale. Sometimes the buyer and seller will be present for the closing, but many times they are not.

Throughout this process, the business broker should be available to your for guidance. Never hesitate to ask questions during the process. A good business broker will not mind answering questions. It is always better to ask now than to regret later that you did not ask!