What Sellers Like To See
Buying a business is not easy; you will have questions and concerns. Selling a business creates just as many questions and concerns for the seller. You can often get a better price and terms by being aware of the seller’s needs and removing some of his/her uncertainties.
The more information the seller has on your experience, qualifications and financial strength, the more likely he/she will be to accept you offer to purchase. By offering “owner financing” to you, the seller is acting as your banker and needs to feel comfortable. It is important to remember, once the seller accepts your offer, they are committed, but you still have contingencies to remove before moving forward.
What’s an Offer to Purchase?
An Offer to Purchase is just that – an offer. If it is not accepted by the seller within the time you set, your offer is void. Most Offers to Purchase have contingencies, that is, they become void unless certain things happen. All offers are contingent upon, or subject to your price and terms being accepted. An offer could also be contingent upon:
- Books and records approved to your satisfaction
- All equipment being in working condition
- The business being sold is free and clear of debt
- Ability to get necessary licenses and permit
- Business passing necessary inspections
If any of the contingencies in an offer are not met within the time you set, the offer is void and your deposit is returned. Most offers also have conditions imposed on the seller, such as:
- Providing a non-compete agreement
- Agreeing to a specified training period for the buyer
- Confidentiality of the terms and conditions of the sale
A Fair Offer
A fair offer is one that realistically satisfies the needs of both you and the seller. At times this results in an offer that is different from the listed terms. A word of caution: What about unreasonable offers? They can damage your relationship with the seller, possibly reducing your chances of getting the business at a fair price.
Reasonable Down Payment
Though your instinct tells you to conserve cash, a very low down payment can indicate a buyer’s lack of commitment to the business in the eyes of the seller. The number one concern of sellers is the safety of taking a note from the buyer. If the seller questions a buyer’s commitment or seriousness about the purchase of the business, the seller may not negotiate in a serious manner.
Quick Removal of Contingencies
It is to everyone’s advantage to proceed through the contingency removal phase of the purchase in a timely yet thorough fashion.