Buyer Process

Here is an overview of the typical process to buy a business:

Stage 1
Getting Started with Purchasing a Business

Initial Consultation: We’d like to get to know you and your interests in purchasing a business by meeting with you where we can answer any questions or concerns you may have, help you understand how small businesses are valued, the sale process, and share how Horizon Business Brokers can help you obtain your goals!

Complete Buyers Package: Each buyer is requested to complete our Buyers Package which includes a Confidentiality Agreement, Buyer Profile, and a Personal Financial Statement. The Confidentiality Agreement helps protect all parties concerned in the sale process and allows us to share confidential information with you regarding the businesses that interest you. The Buyer Profile helps us understand your background, interests, and needs so we can be sure we help you purchase the right business that you will enjoy operating and be just as or more successful than the seller. The Financial Statement gathers your financial information on a very high level (we don’t ask for Social Security Numbers, Bank Names or Account Numbers), this allows us to determine your financial ability in terms of how much of a business you can afford to purchase and if you meet the qualifications of lenders, landlords, and franchises (if applicable).

Outlining Business Interests and Opportunities: This is where we will get a thorough understanding of your business interests and try to start identifying some business opportunities for you. To do this efficiently and effectively please have a list of your goals, a few business industries that may be of interest to you or perhaps not of interest so we can refine our search, an idea as to what your annual cash flow needs are (a business’s value and sale price is largely determined by the cash flow it generates), what you think your available down payment and total budget may be, as well as what geographic areas you are interested in purchasing a business. Having all of this outlined will allow us to quickly identify the most viable businesses for sale that meet your overall needs and interests.

Stage 2
Business Search

Identifying Business Opportunities: From our initial meeting and outline of opportunities we will start searching business opportunities with you. Once one or more businesses have been identified that may be of interest to you, we will further discuss each business for sale to see which are worth pursuing.

Viewing Business Opportunities: Once we have identified what may be the best business opportunity for you, we further discuss the possibility of purchasing that business by meeting the owner. This meeting is typically a general introduction and used to answer any financial or operational questions a buyer might have. Meetings between buyers and sellers can take place at the business, outside of business hours of course unless otherwise agreed upon, at a convenient place offsite or our offices if preferred. It is understood that a buyer will certainly want and need the opportunity to review the most recent financial data available, speak and meet with the owner and tour the space a business operates from before an offer can be expected unless the buyer is otherwise comfortable.

Determining Interest: After we have identified and viewed opportunities we will determine which business for sale is the right one for you to make an offer on at which point we will work together to determine a fair market value and offering price to present to the seller.

Stage 3
Offer and Due Diligence

Offer to Purchase: Once we have selected a business that meets your goals and interests and determined there is sincere interest this is when an initial offer to buy the business is made. We can work with you in helping prepare an offer whether that is utilizing a Letter of Intent or a Purchase Agreement with necessary contingencies in place, but always recommend and encourage that each party engage proper counsel from an attorney, accountant and other financial advisers before completing and signing any contractual agreements. There may be some back and forth negotiations that take place until all the general terms of the purchase are agreed to by all of the parties concerned. An Earnest Money Deposit equal to 10% of the sale price or $10,000, whichever is greater is typically collected from the buyer at this stage to show their good faith and commitment in purchasing the business.

Due Diligence: This phase is the most important aspect of the purchase for the buyer. You are asked to study the business in as much detail as possible in order to satisfy yourself and your advisers that the business is what you expected. The due diligence period is also the time where the buyer obtains approval to take over a lease (re-assignment or re-negotiated), gain franchise approval if applicable, get any necessary bank loan approved as well as start filing for any licenses that are needed to operate the business. If you are satisfied with your findings in due diligence, we will proceed to finalizing the purchase of the business and move to settlement.

Stage 4
Finalizing the Purchase of the Business

Assist in Resolving any Issues: If there are any issues while performing or coming out of due diligence related to the financial health and performance of the business, operations of the business, your ability to secure funding, obtaining the lease or franchise agreement (if applicable), or necessary licenses needed to operate the business we will do our best to work with you, the seller and any outside advisors to resolve any issues to ensure we can proceed to settlement. It may be necessary to make amendments to the Letter of Intent or Purchase Agreement to extend due diligence or postpone settlement.

Establish Definitive Purchase Agreement: If a Definitive Purchase Agreement hasn’t been executed by both parties already (if a Letter of Intent was first established) since this can be done prior to or after due diligence we would want to finalize the purchase agreement to be signed prior to or at settlement. The Definitive Purchase Agreement is the final agreement that all parties sign which formally defines all the terms of the sale and transfers the business to new ownership.

Finalize Funding: We want to be sure that 3rd party financing and/or any personal funding to complete the purchase is in place. This is also a time where we will work on finalizing any applicable lease, franchise agreements, and license transfers.

Settlement: The settlement is the final process in a small business purchase. An attorney or attorneys for the buying and selling parties draw up and complete the documents necessary for finalizing the purchase. When all terms are agreed to, final purchase agreement and closing docs are signed, a lease is approved through the landlord of the property and signed, and franchise documents (if applicable) have been signed, the business is transferred at a formal closing with money and keys changing hands.

Horizon Business Brokers understands that buyers need answers, advice and direction and they want choices before making a very important decision to purchase a business. We solve those questions, provide the clear path needed and offer those choices. We have a network of small business lenders that offer financing, relationships with attorneys, accountants, and financial advisors to assist you through the entire process to make sure you are making the right decision. Buying a business is a process that is time-consuming and can be frustrating without a professional broker to guide you through it, so don’t hesitate to contact us today for a free consultation to learn how Horizon Business Brokers can help you buy a business!

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