Buying a business in today’s economic climate requires that buyers be on the ball. The current economic climate, as far as business acquisitions are concerned, is a seller’s market for high-quality businesses.

With corporate downsizing, economic downturn and other factors, there are a lot of very knowledgeable buyers out there looking for one of the very few good businesses to buy. This means that you, as a buyer, have a lot of competition. Consequently, you need to be well prepared. Depending on the type and size of acquisition being sought, it can take anywhere from three months to three years to find the right business.

Are you ready to buy but not sure how to find the right business to purchase? Our years of combined expertise and successful track record of billions in closed transactions demonstrate that we have the network and knowledge to guide you. Contact us today and let’s make your next move a successful one.

Decided to Buy a Business? Here Is the Step-by-Step Process

The Decision

The first step is deciding to buy a business. Once you have made this decision and you are definite and firm about the fact that you are definitely buying a business, the process has started.

The second step is to decide what kind of business. What are the criteria for this business you are looking to buy? Don’t make a wish list for what would be nice. Make a list of what is important.

Remember, if your standard of living requires $100,000 income, do not compromise by looking at businesses that make only $50,000.

Other criteria to consider when buying a business include: Is it something you can handle? What kind of work are you willing to do?

For example, if you like sales and do not like running a factory, buy a distribution company or a sales organization–-but in any case, don’t buy a factory or manufacturing firm if you don’t like that kind of activity.

“I’ve had people call me to inquire about buying a body shop when they’ve had no automotive experience at all,” remarks Michlin. “You can buy an auto repair shop, muffler shop, brake shop or lube store and learn the business. However, you probably shouldn’t buy a salvage yard, body shop, or scrap yard without being raised in the business.”

According to Michlin, if you are a salesman you can buy almost any business. All manufacturing, distribution or retail sales require good personal sales skills.

If you feel you are poor at interpersonal communication skills, or if perhaps English is a second language, you might consider buying something like a liquor store, gas station or hamburger stand; just a few of the businesses that do not necessarily require extensive personal selling skills.

About you

There are some things you need to prepare for the brokers when they start coming to you with possible businesses. One of the first things to address is to make sure that you have your down payment sorted out. Expected down payments are anywhere from 25% to 100% of the selling price. So make sure you know what you want to spend and then make sure you have the down payment easily available.

‘Then you need to get your financing options determined,’ says Michlin. ‘You can get yourself pre-qualified for a business loan or an SBA loan if the business you’re buying is required by you to show a profit on the books.’

SBA loans are only available to businesses that have shown a 5-year profit on their tax returns. If you are looking at businesses that have heavily unrecorded income, you must have cash or seller financing.

It’s A Competitive Market For Buying A Business

If you are looking for a profitable, well-run business to acquire, you are not alone. Right now, there are not enough businesses for sale to meet buyer demand, as reported by a Market Pulse Survey in early 2017 and sponsored by the IBBA (International Business Brokers Association) and M&A Source. The survey was conducted with support from the Graziado School of Business at Pepperdine University.

There is an unusually large volume of high-caliber buyer activity in the market. Not only are there not enough businesses on the market to satisfy the number of buyers looking for an acquisition, there’s much more capital available than there are companies to buy, as indicated in Deloitte’s Perspectives Report.

As soon as a solid business goes on the market we see well-prepared ready-and-able buyers competing to put themselves in front of the Seller. Buyers must be prepared and ready for the competition and be able to move quickly.

The following checklist will help you achieve acquisition-ready mode.

Understand the Buying Process

In a competitive environment, it’s also crucial that you understand the buying process. Therefore:

• Get prequalified for financing from an SBA Preferred Lender (PLP) or other financial institution that specializes in acquisition financing
• Target businesses that suit your skills, background, lifestyle, knowledge base, natural talents, and your budget.
• Remember that there will be financing costs, legal and accounting expenses for professional assistance during due diligence, and closing costs.
• Recognize that lenders, landlords, and others who will be a party to your eventual business acquisition will require personal and financial information to make sure you have the requisite financial and experience qualifications to meet all contractual obligations.
• Have your professional advisors ready, such as your CPA and/or attorney to help you through due diligence. Make sure they are experienced business-transfer professionals.
• Let the seller know that you understand deadlines and are ready and able to close the deal.

Buying a Business Is a Complicated, Detailed Process: We’ll Be Your Guides

Our professional team members can guide you through the entire process, thanks to more than four decades of proven experience. With our powerful network of trusted advisors, we’re ready to help you achieve a successful outcome.

Reach out today to get started.