Buying a Business FAQs

Question 1

How Can I Verify That the Seller’s Reported Profits Are Accurate?

Accepted Answer

As part of the acquisition process, you will have to go through “due diligence.” During this period the seller is required to present documents to verify his profit numbers.

Question 2

What Will the Process of Buying a Company Cost Me?

Accepted Answer

Transworld is generally paid by the seller, not the buyer. However, there are other costs, such as legal and accounting fees, and transition or startup costs that the buyer incurs.

Question 3

Do I Need an Attorney and an Accountant to Buy a Business?

Accepted Answer

Buying or selling a business can be a complicated venture. While some businesses are sold without the help of accountants and attorneys, we strongly recommend that both the buyer and seller engage professionals.

Question 4

Is Buying a Business a Good Idea?

Accepted Answer

Buying a business is considered less risky because it is already established. An established business has a vendor and supplier list, a customer base, and an entirely trained staff already in place. There are benefits to acquiring a company with a good financial history and immediate cash flow. With customer loyalty comes goodwill, which is one of the most important and incredibly valuable intangible assets when you buy an existing business. Meanwhile, a new start-up business must build the market for its goods and services, create a following, develop a financial history, etc., all while trying to create some cash flow.

An existing business may not only have a storefront but probably also comes with equipment and inventory – which can be a major upfront investment. Although you may think this is reflected in the listing price, it is important to note that the previous owner already had seasons of trial and error to establish which equipment worked best and which inventory is most popular among its customers. This information is priceless as it will save you time and money.

Although every investment comes with ups and downs, purchasing a business is a good idea. This is especially true for someone who wants to invest and see a return quickly, rather than someone with the time, patience, and energy to dream up something new.

If you are thinking about buying a business, Transworld Business Advisors has an experienced team of business brokers in offices across the country ready to help you find the right business to buy. If you have not settled on a specific industry, our brokers can discuss the details of each with you as you narrow down your options.

Question 5

Where Can I Go to Look At What Businesses Are Available to Buy?

Accepted Answer

Our website, www.tworld.com, has a search page where you can look at thousands of businesses. There are a lot of other websites that have businesses for sale. If you find any business for sale, please call your Transworld representative and we can contact the seller or other broker on your behalf.

Question 6

Will the Current Owners Train Me to Run the Company?

Accepted Answer

Depending on the complexities of the business, the former owner will offer varying levels of training. On most small businesses, the owner will offer training for two to four weeks at no cost to the new owner.

Question 7

How Much Money Will It Take To Buy a Small Business?

Accepted Answer

Businesses vary in price a great deal, however, it would be unlikely that one could buy a business with much less of a down payment than $20,000.

Question 8

What Do I Need to Do to Buy a Small Business?

Accepted Answer

Step 1: Ask yourself: What kind of business would I like to buy?

You need to decide what industry you might like to enter. Does this industry align with not only your interests but also your skills? What kind of products or services do you feel confident you can market and sell successfully? All these questions are important before you make an offer on an existing business.

Step 2: Hire a business broker.

Before you begin your search, hire a business broker. Not only are they experts in negotiating, working with accountants and attorneys, solving problems, and ensuring deals cross the finish line, but they are also experts in both the selling and buying process. With a unique perspective from both sides of a sale, they provide invaluable advice during the process. Not to mention, they will come in handy with checklists, strategies, and a network of sellers with businesses for you to choose from.

Step 3: Establish your goals.

Before your search, you will need to establish your goals. For instance, what is your budget? What is the maximum amount you can spend? Other factors that you need to consider are: what industry, company size, location, sales, and staff align with your investment goals. Without these goals, the search will be overwhelming and fruitless.

Step 4: Research! Search for businesses on sale

Your Transworld business broker has access to an extensive network of businesses for sale. With their guidance, you can punch in your preferred parameters (the goals you have established) and then begin your search!

Step: Make an offer!

Meet with business owners and tour the businesses. Visiting businesses you have interest in and meeting with the owners is crucial. Once you have reviewed the offering and met with the owner, at this point, you will want to make a contingent offer on the business. If it is accepted then you can start the next step.

Step 6: Do your due diligence!

Have a signed purchase and sale agreement or LOI?  It is time to do your due diligence. For due diligence, you will need to have a team of lawyers, accountants, and brokers in your corner. At this point, the experts need to do a deep dive into the business’s financials to ensure everything they have said about their numbers is true. To help, use this checklist as a start.

* Business licenses and permits
* Organizational paperwork
* Environmental inspections
* Contracts and leases
* Status of inventory, equipment, furniture, and real estate
* Past financials and supporting documents like bank statements.
* Lein search
* Non- Compete Agreements or Anti-Solicitation Agreements to protect your purchase

Step 7: Go to the closing

Once all the supporting documents, leases and contingencies are acceptable, you can move to get the deal closed and start the transition period!  Congratulations!

To buy a small business, you will need money on hand to make the purchase. But arguably, the most important thing you need, is a trusted and experienced business broker. Your broker will walk with you through the entire process and serve as your eyes and ears to help ensure you purchase a business you love, and that the process is smooth from beginning to end. With knowledgeable brokers across the world, you can count on Transworld Business Advisors – contact us today.

Buying a Business FAQs

We often get the same questions from buyers as they prepare to purchase a business. So, we’ve compiled the answers here.

Have more questions about buying a business?

Our advisors have decades of combined experience.