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Be clearly focused. Know what it is you are looking
for. Have a checklist. Focus on your key skills and look for businesses
that can complement these. Buyers and brokers will quickly dismiss
you if they think you are a time waster or tyre kicker. The perfect
business doesn’t exist, and you may have
to compromise on what you are looking for. Do your homework before
you go looking.
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Do you really want to buy a business?
How serious are you about buying a business. Is it a pipe dream
because you’re bored in your present job or are you really prepared to spend the time (sometimes up to a year) and money looking for your opportunity? Do you have the support of your wife or partner? Can you see yourself working hard to make your purchase a success? Do you know what’s
involved?
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Understand the seller's motivation.
This is vital. Why is the business for sale? Don’t be afraid
to ask this question directly. Has the seller paid an upfront
fee to a broker to represent them? How committed to selling are
they? What will the owner do after the sale? You need answers
to these questions in order to assess the proposition properly
and find out if the business has any underlying problems that
the seller is trying to escape.
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Not getting enough information / Asking questions.
You need as much information as possible to help you assess the
opportunity fairly. However, this needs to be balanced against
the owners need to maintain confidentiality. Don’t be put off having to fill in a confidentiality agreement or non-disclosure agreement. You won’t
get far without one. Ask questions gather as much insight as you
can.
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Not having the money.
Don’t expect to buy a business without access to funding or a cash pile. You can find and negotiate great deals, but you will need the finances in place if you are to be taken seriously. Don’t get offended if you’re asked to provide proof of funding ability. A seller will want to make sure you’re
serious and not a time waster. Work out what your budget is and
how you can finance it. Remember, you will probably need to allow
for working capital requirements and debt repayments.
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Presenting yourself.
A broker, representing a client will look for three main things from
you if you are to be taken seriously:
Can you finance a deal ?
Do you have the ability or skill set to run the
business?
Will you get on with the owner? Update your
CV, prepare a personal profile, assemble an acquisition brief
and know what you want to achieve.
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Understand
the brokers role and how they can actually help you. A broker is
there to facilitate a deal, not to be obstructive and get in your
way. Don’t get upset when asked to provide information about yourself and your finances, or to fill in a confidentiality undertaking. These are to protect the seller’s interests. A broker will be managing the sale process on behalf of the vendor, and they will be talking to many interested parties. Don’t
be afraid to ask questions and seek guidance on the best way to
approach the purchase. Be honest and upfront, and a broker should
do all they can to help you..
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Don't contact the seller directly.
Unless you are given the go-ahead by the seller or broker. you
should not contact the vendor. This is not to protect the broker’s commission, as most people mistakenly believe. This is so that you don’t compromise the confidentiality of the seller. Respect this or you won’t
get very far in your attempts to purchase.
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Making a decision.
It is only courteous to let everyone know as soon as you’ve made a decision – either
way. Provide feedback to the broker and let them know if a particular
business is not for you. They can help you find something more suitable.
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Don't be afraid to make an offer.
Offers can be made subject to contract and due diligence. If you
like the business and it ticks your boxes, make an offer - state your
interest. You are not obligated. However, make sure you have the finances
in place as you will get asked to prove your ability to make a purchase.
