The broker will set up a meeting with the seller once you select a business you are interested in. This will give you an opportunity to speak candidly with the seller and find answers to your questions.
A popular
question you may consider asking is, “why are you selling”. Ensure you are
comfortable the answer, make sure it is honest and consistent. This will put you in position to dive much
deeper into the interview.
You will ALSO
want to ask questions about:
The product and service mix, are there
opportunities for additional services or new products in the pipeline with the existing
customers?
The customer mix, do they have any 1
customer that represents greater than 10% of the overall gross sales?
The competitive environment, who is the
largest/strongest competitor, what is your competitive advantage?
The key employees, what is the role of the
owner and which employees are critical to the operation of the business?
The cash flows, how do you bill customers,
up front, during or after a project is complete?
The sales and marketing, what is the
current strategy, are there any changes necessary in the future.
Just to name a few.
If you are still interested in purchasing the business after a discussion with the owner, the broker will help you draft an offer based on the price and terms you feel are appropriate.
The legal language that makes up a professional business brokers letter of intention will be thorough. In fact, two of the most important clauses in our Offer make the transaction contingent upon your lawyer reviewing the legal language of the Offer and your accountant's analysis of the seller's financial statements.
Once these contingencies have been satisfied, the broker will carefully manage the rest of the transaction to make sure that all the conditions of the Offer are satisfied through the closing.
Do you have a small business question
you would like answered about this article or others?
Bill Sivell is a salesperson with VR
Windsor Inc. [www.vrwindsor.com]
519-903-7807, which sells businesses to buyers across Canada and around the
world. His 14-year career includes diverse senior management positions in
marketing, advertising, sales management and operations management. His blog
appears every Tuesday.
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