Getting Started - Questions and More Questions: The search for a business opportunity almost always starts with a telephone call or a visit to a website like the one we host at VR. Sometimes the prospective Buyer is a Corporation, Private Equity Group (PEG) or a Private Investor who has a very definite idea of the type of business wanted. Often, however, the Buyer is a first-time buyer and is still in the exploratory phase of the search. Many times a Buyer's first question is, "What kinds of businesses do you have?"
Well, we have access to lots of businesses for sale, so that is a tough question to answer without some idea of the buyer's resources, skills, and needs. For example, maybe we just listed Ford Motor Company and you, our prospective buyer, just happen to have several billion dollars and a background in automobile manufacturing. Now that is a match made in heaven! But seriously, it's a match we cannot uncover without questioning you and learning more about you.
So, the first and most important step is telling us about you. Be patient when we ask, "How many days per week are you comfortable working?" and "Do you like having employees?" and "How much cash do you have for a down payment?" and many other questions. We are not just being nosy, we are narrowing the search and saving you time and aggravation.
There are two basic ways to get started on your journey as a Buyer and to begin the process of working together. First is our "Contact Us
" page, which is a great way to introduce yourself, especially if you have a casual interest or if you are not really sure where to begin. Use the Comment fill-in field to initially share what you are looking for in a business opportunity and we can explore more details during our initial phone call together.
The second way to get started is to complete our Buyer's Packet. The Buyer's Packet is our formal process, whether you have a specific business you want to pursue or just shopping around for any business opportunity.
The Buyer's Packet serves just as important of a role in the buying and selling process as the Listing Packet is for a Seller.
The Seller is providing confidential and detailed information about their business and they are trusting the Broker to only consider serious and qualified Buyers, regardless of which business brokerage is representing the Seller. Thus, the Buyer's Packet
is how we validate and qualify you as a vetted and serious Buyer.
Time Out for a Special Note to Buyers...
We are going to be bluntly honest here... if you do not fill out the packet, or refuse to share your information, then we cannot validate you as a qualified Buyer. In our experience, Buyers and agencies who are serious and who know what they are doing are freely giving of this information because they already know and understand what the Broker is doing on their behalf. Those who are unwilling to share tend to never buy anything and it becomes a disappointment to everyone involved because the Broker did not do their job completely and the Buyer failed to represent themselves as a qualified buyer. This is a process which begins on a foundation of trust, but it is the Broker's responsibility to verify the Buyer's claims, and it is the Buyer's responsibility to cooperate with the Broker. Every business brokerage has some form of Buyer vetting processes. If you, the Buyer, are not ready to fill out a Buyer's Packet, then feel free to continue to browse the listings and to call our office for general questions. When you are ready, we will be here!
...and now back to our website...!
There are two different professional representation services we provide to Buyer's:
- Traditional Buyer's Representation; or
- Specialized Buyer's Search and Representation.
Traditional Buyer's Representation is for those clients who already have a specific business identified, perhaps from an online listing or marketing flyer, and they are seeking the assistance of the Broker to facilitate in the communication, due diligence, and transaction of the business purchase. This type of service and representation is typically paid as a success fee or commission by the Seller at the time of closing under a separate agreement with their listing broker. In this case, the Broker does not get paid unless the business is purchased by the Buyer being represented.
The more sophisticated specialized representation service involves the Broker's expertise at searching for a business for sale on behalf of the Buyer as a boutique or customized and catered service. This is what we consider to be the Specialized Buyer's Search and Representation engagement. This type of service is more involved, more time consuming, and more delicate to manage. In most cases, the ideal business sought by the Buyer is not on the market. Therefore, the Broker is relying on industry relationships with candidate businesses which meet the Buyer's criteria and uses a combination of business tools, research, industry economics, experience, and sales skills to persuade an Owner to sell their business. Due to the increased time commitment and the cost of the resources involved, there is typically a nominal retainer of between $1,500-$5,000 per month to engage the brokerage for formal search and representation services, depending on the scope of the engagement. The retainer is credited back to the Buyer at the time of closing, up to the amount of the Broker's success fee. Otherwise, standard success fees are typically paid by the Seller under a separate agreement with their listing Broker. Meanwhile, the working retainer serves to ensure a commitment between both the Broker and the Buyer by ensuring a devotion to the project on behalf of the Broker as well as demonstrating the Buyer's seriousness to pursue, and follow through, with the engagement. This also serves to show the Owner/Seller how serious to take the matter under consideration and to have confidence in knowing they are working with professional Brokers who represent vetted and qualified Buyers.
To complete the Buyer's Packet, start by clicking here:
Defining the Search - Non-Confidential Summaries: After we have talked through your ideas, needs, criteria and requirements for a business opportunity, we can begin narrowing the search. At this point, we find and present non-confidential summaries of business opportunities for you to consider.
What is a non-confidential summary? Basically, this is a 1-3 page "vanilla" or "blind" flyer or mini-packet about the business. In most cases, this is the same as the information you see on a website, and sometimes this mini-packet may have slightly more information, but nothing that will give away any confidential details about the business. Typically, the listing Broker will ask for at least a Non-Disclosure Agreement (NDA) or a Confidentiality Agreement (CA) before sharing this information, but there are many brokers out there who freely share this non-confidential summary if you give them your contact information.
Since you are viewing our website, you can see some examples of the non-confidential summaries of our exclusive VR network-wide listings or by simply using the "Businesses For Sale" search queue located on the side of our page. You can also view our local listings, which are shown at the bottom of our Home page or Contact Us for our private listings.
VR non-confidential summaries show our profile number, a description of the business, a summary of financial performance, the reasons why we think it may be a good opportunity, and the asking price. We recommend at this point you focus on the business and not on its financial performance or price. It is far more important now to find a business type you would enjoy owning. As we refine the search for the type of business opportunity you want, we will then look at businesses within your investment price range and businesses with the types of financial performance which meet your investment criteria.
Focusing on a Few - Digging Deeper: At this point in your search, you will find yourself holding one or more non-confidential summary sheets for businesses you want to know more about. This "digging deeper" step takes your business opportunity search to a new level of business inquiry.
This new level of business inquiry is one of mutual trust and obligation between you, VR and the Seller(s) of the business(es) you are interested in. You will be exposed to the specifics about the businesses which you have been considering and your next step is to agree to keep this information confidential.
Before we send you confidential information, we require you to complete the Buyer's Packet mentioned above. When you complete the packet, we will divulge to you the name and address of the business along with some additional details to help you consider the opportunity. You can either use the Buyer's Packet button above or you can download a copy of these documents by going to our Forms & Resources
page and then completing and returning the documents to us, either by scanning and emailing, dropping off at our office, or mailing to us. We can provide you a secure and encrypted file transfer link to safely exchange documents if you ask.
Please note, when you sign the NDA/CA you are agreeing to keep all of the information you receive about the business as strictly confidential, and you are agreeing not to contact the owner of the business except through us and only with our permission. We take any violation of this bond of trust very seriously and we will not tolerate any breach of this trust. The Seller may exercise their legal and civil rights to claim damages against you for violating the NDA/CA. However, we are going to be trustworthy and professional and we should not have to worry about that, right? Anyways... on to the Business Profile!
The Business Profile - The Facts & More: A big part of our job on behalf of the Sellers and Brokers we work with is to do the work of selling their business while affording the Seller the time to run their business. This means we will work with you to answer your questions about the business before we introduce you to the Seller.
The VR Business Listing Profile on the business you are interested in is written to give you the information you need to decide whether or not the business is right for you. A typical business profile contains a detailed description of the business, summary financial data, additional business facts like lease information, the number of employees and much more. We split the Business Profile into two parts.
The first part is the Business Profile Listing Information packet, or BLI, which we also call the "Go/No-Go" packet. There is enough summary information and details provided in this packet to compare the business against your buying criteria. If the business meets your criteria and if you desire to move forward with further due diligence, then we "Go" forward by drafting and signing a non-binding Letter of Intent (LOI), which is conditional upon your satisfactory review of further due diligence, and then you receive the second half of the BLI, which we refer to as the Due Diligence packet.
Due diligence - a specified period of time during which the buyer investigates the business fully- is costly and time-consuming, and it must be done only after an agreement on the initial price and terms is reached through the LOI. If, after your due diligence, you have a need to amend the LOI as part of your draft or final Offer to Purchase, you can make those changes in the Offer to Purchase.
It is the Seller's responsibility to prove everything to the Buyer. In another way, your LOI agreement on price and terms will be "non-binding" until you have had the opportunity to see all financial records and we have removed all contingencies.
Keep in mind, your LOI is contingent upon your satisfactory review and due diligence. Although LOI's are non-binding, they should be considered seriously and treated as if it is a true agreement. As with any formal agreement or contract, if you have questions about the agreements or contracts then you should seek the advice of a qualified legal advisor or licensed attorney.
For the initial step of the due diligence phase, we typically meet at our VR office
or over a Zoom
call and we present all of the financial documents to you. You will be asked to block off at least four hours for this detailed review, perhaps the entire day or several days, depending on the size of the business and the number of key stakeholders and advisors involved. You are welcome to bring your laptop and to invite your business partners, CPA, attorney, or anyone you believe is needed to help you review the business financials. The Seller or their Broker is usually not present at this meeting, but we arrange for their availability by phone.
The due diligence meeting can last several hours and we go through every line entry and review every business detail to your satisfaction. If the numbers meet your criteria and you are satisfied with continuing to move forward, then we discuss the initial terms of your offer, prepare a draft Offer to Purchase (again, contingent upon your satisfactory review and due diligence of the business), and look at scheduling a day and time to meet the Seller and to do a site tour of the business.
If you decide after seeing the BLI that this business is not a good fit for you, then you make a "No-Go" decision and we move on to the next business opportunity.
If you are moving forward, and you are satisfied with the draft Offer to Purchase, then we move into formal due diligence and you are given a few weeks to do more research, verify your finances or work on your loan, and to submit the official Offer to Purchase to the Seller.
The Business Owner Face-to-Face: After reading the BLI and reviewing the financial information on the business, you should be prepared to make an offer for the business. If not, your VR representative will answer further questions and may, if indicated or not already scheduled by this point, set up a meeting with the business owner prior to your making an offer. This is an important step. Not only are you learning more about the business from the person who knows the most about it, you are also seeking to tell the business owner as much about you as possible since you may be seeking installment terms from the business owner as part of your offer. Often, your buyer credentials and ability to purchase the business are presented at this time as well to provide reassurance to the Seller that you are ready, willing, and able to buy the business if it continues to meet and satisfy your requirements.
If you have already declared your satisfaction with your initial review and you have a draft Offer to Purchase, then we schedule a day and time convenient for everyone to meet and to take a site tour of the business, if we have not already done so. This typically happens within your formal due diligence window and the general expectation at this point is that you are, for the most part, satisfied in what you are seeing, comfortable with the numbers you have reviewed, and still intend to buy the business, provided there are no misrepresentations or serious concerns which cannot be corrected or otherwise overcome. Your offer is conditional, which means you can still back out if you are not satisfied.
Making an Offer: After meeting the business owner and touring the business, the next step is making an offer for the business. Making an offer is not a final step. In fact, it should be viewed as the first of several steps, each of which brings the Buyer and Seller closer to completing the transaction.
The Offer to Purchase - Terms, Contingencies & Conditions: Your Offer to Purchase will consist of terms, price, down payment and other terms, such as Seller financing or key employee agreements. The formal Offer to Purchase is presented either at the end of your due diligence window or at any time before then when you are ready to make the formal offer.
Contingencies: Approval of books and records, equipment, inventory, assignment of leases or loans and any other items that the Buyer requests to be incorporated into the structure of the agreement will be identified, in writing, and completed in accordance with the requirements you both mutually agree upon within the Offer to Purchase.
Conditions: Non-compete clauses, consulting agreements, training agreements and other relevant parts of the structure of the agreement will be spelled out, in detail, and agreed upon and signed by both parties before the closing.
Your resume of business background and experience: You should have your resume and biography readily available and included in your Buyer's Packet. When you submit the LOI, we will include this information to share with the Seller.
Your Personal Financial Statement: Your Personal Financial Statement, or PFS, is a key document to help ensure two things: 1) that you are ready, willing, and able to purchase the size of business you are considering; and 2) to build trust with the Broker and assure the Seller that you are credible. In no circumstance does the Seller see your PFS. This document is kept confidentially by the Broker and only shared with the Lender or another party with your written consent. For example, we help introduce you to SBA lenders, business attorneys, and business CPA's. We also help you assemble and package your documents in anticipation of bank financing or attorney paperwork. If your PFS is needed by the Lender as part of their application process, we can either share the version we have with your permission, or you can fill out their version on your own.
We use your PFS information on our side to verify your credibility and to ensure we are showing you suitable business opportunities and not wasting everyone's time. This is not intended to be crude or disrespectful, but the Seller is putting a lot of effort into selling their business and they are trusting the Broker to bring viable candidates and to maintain their confidentiality. That is why you do not see open houses for businesses for sale, much like you see for real estate. The key word is TRUST. The Seller trusts us and we need to trust you. The PFS is the key document which sets us up for having the trust needed to be able to move forward together. If you have reasons for not wanting to share your PFS, then understand that our ability to help you may be limited, so it is best to discuss this with your Broker up front and ask about other ways you can demonstrate your ability to buy a business.
Your Earnest Money: An earnest money check is typically in the amount of 10% of the offered price for small businesses, or at least an amount which shows you are serious about entering into the Offer to Purchase. This check is photocopied and presented as an attachment to your LOI, but it is not deposited with the Escrow Agent until there is a signed Offer to Purchase. The terms of your offer will include specific sections which cover your rights to reclaim your earnest money if you do not move forward with the Offer to Purchase.
However, if you misrepresented yourself, or if you have done something to harm the Seller by violating the terms of the NDA/CA, then you may not be entitled to receive the earnest money. We help guide you through this to ensure there is no confusion and we ensure that all parties have vetted their conditions through the appropriate attorneys. In our experience, when a deal has fallen apart, and there was no fault or other harm to either party, the Buyer has always received their earnest money back if they decided to walk away. Your situation will require specific attention and we will help you navigate through this sensitive subject.
Due Diligence: You and your advisors - attorney, accountant, and others - will have a specified period of time to complete your due diligence and remove the contingencies. When due diligence is complete and the contingencies are removed, the Offer to Purchase is binding. Should the business fail to pass due diligence, you are free to rescind or amend your Offer To Purchase.
Almost every deal requires some form of financing
. At VR, we work with Buyers to help obtain the appropriate financing for the business being purchased. Often, this means a Seller's note and it also often means a bank loan guaranteed by the Small Business Administration (SBA). But whatever the financing requirements, Buyers can expect guidance and assistance from VR in this important area. We know what paperwork the banks will need, we know how to fill out the SBA loan applications, and we provide you with additional support, such as developing your business plan and your plan to transition into business ownership. We also provide the certified business valuations
and appraisals you need for certain SBA loans and for your annual IRS reports.
Escrow & Closing: Escrow typically takes about 3-4 weeks. After escrow receives signed instructions, the escrow officer will contact government tax agencies for clearance and publish your fictitious name filing, enabling you to open business and banking accounts. Also during this time, a Notice To Creditors will be published allowing anyone with a claim against the business to step forward.
You're in Business!
Congratulations! Finally, the big day arrives and you open the doors of YOUR business for the first time. There is a no bigger thrill, no better feeling than knowing you are in control of your destiny!
When you work with VR, we guide you along the way and help make your transition into business ownership as stress-free and simple as possible. So, now is the time to go back to our "Businesses For Sale" section on our Home page and get started on your search for your part of the American dream!