What kind of business should you be looking for? How do you find a business that is right for you? What is the right price for the business you have found? Buying a business is a process.
Following are "Ten Steps to a Successful Purchase of a Business".
 
"Knowing Your Strengths & Weaknesses is Essential
to Buying a Business which is Right for You"
1. Buyers Criteria - It is important that we clearly understand what the buyer hopes to accomplish by buying a business. Are we looking for a synergistic fit with existing products? Are we looking to diversify? How much unincumbent capital do you have to invest? What people resources do you have to operate a new business? What size in terms of revenue and employees? Geographic location? If you are a first time buyer consider your skills and expertise. What are the buyer’s short term and long term goals and objectives?
2. Finding a Business - Using the latest data base, we will conduct a search targeting companies which fit the buyer’s criteria. Depending on the business, the search may be local, provincial or international. Using North American Industry Classification System (NAICS) Codes, or Standard Industrial Classification (SIC) Codes, allows us to fine tune the search to a specific industry, product line or service.
3. Opportunity Evaluation - We need to look at the product(s), the service and asking price to determine the value this represents to the buyer. We will provide a business valuation which will be based on; current year as well as 3 to 5 years historical financial documents, 3-years sales forecast, employee organizational charts, product information, brochures, lists of all leased and owned assets and equipment. Market research, product research, future market trends, economic trends, as well as the competition, all need to be included in the evaluation.
4. Inspection of the Premises - The appearance of the premises is often a reflection of the owners and its employees. Ensure that the area where the business is located is best suited for the industry, the product line or the service. Accessibility, public transit service and parking facilities. The appearance of the building, its age and how it is maintained. Overall outside appearance and signage visibility. When touring the inside of the facilities note the cleanliness or lack there of. Condition of the equipment and lighting. Any structural or cosmetic changes it may require. If during business hours, employee’s attitude and smiling faces or lack there of...
5. Letter of Intent - Before submitting a firm Offer to Purchase, we will prepare a Letter of Intent which will serve as a non-binding agreement between the buyer and seller. It allows the buyer to express its intent with respect to the price, the structure of the offer, conditions, method of payment, closing date, transition period and post-closing obligations. It also provides a platform for further negotiations, or it may tell us that the seller’s expectations are unrealistic.
"Selecting the Seller That Is Motivated and Can Close the Sale is Essential"
6. Negotiations - We want to get the best possible deal for the buyer knowing that every offer has its breaking point. How the offer is presented and how it is structured, may be more important than the actual purchase price offered. Expert negotiators know how aggressive they can be with the seller without jeopardizing the deal.
7. Due Diligence - This is the buyer’s opportunity to verify all business records. On behalf of the buyer, along with the buyer’s accountants, we will prepare a requisition list of all pertinent documents relating to the business which we wish to examine closely. This list will include all financial records for the past three to five years, employee and payroll records, customer lists, product, equipment and inventory lists.
8. Firming up the Offer - The buyer’s solicitor will use the previously agreed to Letter of Intent as basis for a draft copy of the Agreement of Purchase and Sale. The offer when signed becomes binding subject to any conditions it may contain. The agreement becomes firm only when all conditions have been waived.
9. The Closing - By this date the lawyers will have prepared all necessary legal closing documents. Now it’s a matter of coordinating all parties involved in the signing of the closing documents and payment of closing funds.
10. Transition Period - Usually starts with introducing the buyers to the employees, suppliers, customers and all day to day operations. The length of the transition period depends on the complexity of the business and the buyer’s experience.