Buying a Business

Buying a Business

Buying a business can be a confusing and even stressful event, even for the most experienced buyers. As such, it’s important for any prospective buyer to be knowledgeable about the processes involved in acquiring a business. Thoroughly understanding the process will assist any buyer with the demands of business transfers.

The vast majority of all business buyers are first time buyers, who are unprepared to meet the complexities of a business acquisition. However, whether you are considering your first acquisition or are a seasoned investor, you can look to us for assistance in every phase of the transaction.

The prospective buyer may be a corporation, private investment group or a sophisticated private investor who has a preconceived idea of the type of business desired. On the other hand, many first time buyers are still in the formative or exploratory stage of their search. Frequently, that buyer's first question is, "What kinds of businesses do you have?" Although we have many business listings, that question can only be answered properly when we have some idea of the prospective Buyer's resources, skills and needs.

Typically, Berkowitz Acquisitions spends considerable time with each prospective Buyer. We first gather all the specific information about the individual’s needs in order to match the Buyer to an appropriate business opportunity. At that point it sounds like the job is done, but in reality the business buying process has only begun.

Reasons for Buying a Business

Buying a business may be one of the most important decisions of your life. People buy businesses for many reasons. Not only is there the chance that one can develop a great amount of wealth by owning a business, it also permits the individual to be entirely responsible for their own destiny. One can work the hours one wants, at the location one wants. All decisions can be made by the owner, without having to answer to any “boss.”
The purchase of a business can be very rewarding. Along with freedom and autonomy comes substantial responsibility and risk. Many individuals believe that the benefits from owning one’s own business can greatly outweigh the risks.
It takes a special individual to own and successfully operate a business. Berkowitz Acquisitions can help guide you through the business buying process to help maximize your chances of success and happiness.

Steps for a Successful Business Purchase

Review Your Expectations and Set Your Goals

It is important that you understand the reasons why you are choosing to buy your own business, and to make sure that those reasons make sense. It is also important that you have the correct kinds of skills, as well as proper disposition and attitude for owning a business.
Berkowitz Acquisitions begins the process by confidentially gathering detailed information about you. We will establish your financial capabilities, your skills and experience, and your personal goals. Together with this information, we can determine the best types and size of businesses to pursue.
It is imperative that realistic and achievable goals be set. Berkowitz Acquisitions helps to make you an educated consumer; nobody should have to discover too late that owning a business is less profitable or less fulfilling than their previous job.
Berkowitz Acquisitions will help you through this self-evaluation process to ensure that the decisions you will be making for yourself are good, sound ones. Once this process is completed, we will start your search using our considerable resources.

Choosing the Industry and Location

As mentioned earlier, when buying a business, the choice of type of business and location are yours, but one must be practical. Berkowitz Acquisitions will help you determine your skill sets, experience, likes and dislikes in order to choose an industry that fits your profile. Likewise, one must consider the location of such a business to ensure there are sufficient market opportunities for sustainable growth.

Identifying the Candidates

The next step in the process of purchasing a business is to select candidate businesses for sale that meet you goals and profile. We will work with you to understand the realities of the current marketplace, basic valuation concepts, and to review the available opportunities. Berkowitz Acquisitions has access to business listings locally, nationally and internationally, that can be sorted and selected by variables such as price, location, size, earnings, etc., based on the Buyers needs. Our process will produce candidate businesses for your review and consideration.
Berkowitz Acquisitions also has a “Buyer-Broker Program” available. An analyst on staff will identify and contact existing, non-listed, business in specific industries that meet your criteria of needs. Our records indicate that 5% to 10% of the business owners we contact on your behalf have been considering selling. If there is a good fit, the process can go very smoothly.

Do Your Research

Now is the time to do your homework. Berkowitz Acquisitions will guide you in the research and investigative process to fully understand the businesses you are considering buying. We will not only help you with the financial aspects of the deal, but with the many intangible aspects as well. Berkowitz Acquisitions has research resources available for use that will help to ensure that the candidate businesses meet your needs and mesh with your skills.
This is where our professional edge can really make a difference in a successful acquisition. We make every effort to provide you with pertinent information on a target company's financial performance, staffing, facilities, equipment, lease, inventory, customers and market areas served. In most cases we will have tax returns, products and services, and customer lists for review.

Make an Offer

With our experience and analytic help, we will guide you through the Purchase Offer process. You may not be the only party vying to purchase a specific business, so we will help you make sure that the price you offer is not only fair, but well founded in fundamental value variables of the business. Cash flow, historical performance, proprietary positions, competition and other important issues need to be considered when making such an important decision.
Our Company will share expertise in deal structure and will draft a contingent offer on the business that you have chosen to purchase. A Purchase and Sale Agreement will be presented to the Seller with a good faith deposit held in escrow, to demonstrate your seriousness.
Since most business sales involve privately held businesses, the buyer may be obligated to make an offer before actually reviewing the business' internal financial records. The Buyer should understand that this offer is always contingent upon the seller's ability to demonstrate the accuracy of its representations to the prospective buyer’s satisfaction.

An Offer to Purchase Will Consist of the Following:

Terms of the offer including price, down payment, and financing (interest rate, loan period, etc.).
Conditions including covenants not to compete, consulting agreements, training agreements, accounting and apportionment of work-in-progress, and assumption of liability.
Contingencies such as approval of books and records, equipment, inventory, assignment of leases or loans, and any other items incorporated into the terms of the agreement.
The Financial Statement of the prospective buyer.
The Credit Report of the prospective buyer (paid for by the prospective buyer).
"Earnest Money" deposit check for ten (10%) percent of the offered price.

Arrange for Financing

The majority of business purchase transactions require some form of financing. We work with our Buyers to secure the appropriate financing. This may involve seller financing, bank loan, venture capital financing, angels financing (private investor), SBA financing, and funds obtained through other financing resources. Regardless of your financing requirements, we will provide guidance and assistance in locating the right lender.

Negotiate a Purchase

Once an offer is made to the seller, we will help you with the negotiating process to ensure that the price to value is fair. However, there are other issues that may be of equal or greater importance in the negotiating process. Examples may include the desire for seller financing, non-compete agreements, disposition of receivables and payables, as well as many other items of which buyers may not be aware. Berkowitz Acquisitions will guide each of our buyers to ensure that they are fully aware of all aspects of the business purchase important to its future success.

Due Diligence

Following the signing of a Purchase Agreement, but before closing, there is a due diligence period where the buyer has the opportunity to review all records of the business to make sure that the representations made by the seller are truthful and accurate.
If there are discrepancies between the representations and the facts, a well-written Purchase and Sale Agreement will permit the price to be adjusted accordingly, or the Buyer would be released from the contract with all deposits returned. It is the prospective buyer's duty and obligation to verify the accuracy of the seller’s representations by retaining attorneys, accountants, business appraisers, or other professionals.
Any agreement between the prospective buyer and seller is “non-binding” until the prospective buyer has exercised due diligence in verifying the accuracy of the seller’s books and records, and all contingencies have been removed. Even though buyers will have their accountants and attorneys help in the due diligence process, Berkowitz Acquisitions will always be there to coordinate, advise, and to provide further assistance where needed.

Closing

Once due diligence is completed, financing is arranged, leases are assigned, utilities are transferred, inventory is counted and all documents are prepared, Closing can occur. While this sometimes is a complicated process, Berkowitz Business Brokers will be there with your attorney to help the process go smoothly.

Post Closing

Once the business is officially transferred to the new owner, we will be available to help with the transition process. There will be many things to do, including conducting employee meetings, transferring files, updating computers, participating in transitional training by the seller, and managing a series housekeeping tasks typical of such transitions. Berkowitz Acquisitions will be there to help.

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