Buying A Business
Buying a business can be a complex process. It is important that you find an Advisor who's been through the process and can help navigate through the potential challenges. At Legacy, you are getting an experienced team. When utilizing our services, you have two options:
- Buyer Pool - By joining our buyer pool, your search criteria will be placed into our system, which will afford you access to businesses that meet your specific needs. There is no fee for using our Buyer Pool service.
- Custom Search - This option allows the buyer to engage Legacy to perform a custom business search. This allows the buyer to be the first to evaluate businesses that may not yet be on the market. Fees for this type of service vary depending on the scope of work.
Once your target business has been located, you will be guided through the buying process, which will normally include the following steps.
- Initial Review (1 week)
- Buyer / Seller Meeting (1-2 days)
- Site Visit (1-2 days)
- Offer to Purchase (1 week)
- Negotiations (1-2 weeks)
- Due Diligence (4-8 weeks)
- Financing (3-6 weeks)
What You Are Buying
Generally you are buying FF&E (Furniture, Fixtures, & Equipment), leasehold improvements, lease, branding, processes, customer lists, contracts, website, phone number, license agreements, and good will. Sometimes real property is included in the sale as well.
Where to Start
You can start by signing an NDA (Non-Disclosure Agreement) on our website if you see a business of interest. Otherwise, you can click the Green "Contact Us" button below, and one of our Professional Advisors will contact you.
There are two primary financing methods used when purchasing a business:
1. Seller Financing - Common with small business sales, there are many different types of financing terms such as earn-outs, note, employment contracts, etc.
2. SBA Financing - SBA (Small Business Administration) loans are a common vehicle used for financing the purchase of a small business.
Each lender has parameters set by their institution regarding size and criteria; therefore, it is important to work with a Business Advisor that has access to numerous lenders and can match the transaction with the appropriate lender. The application to closing process can take 6 weeks or longer, so be prepared for this time frame when working with the lender. There is an Express processing available for certain situations.
There are several types of SBA loans, but the one almost exclusively used to purchase a business is a SBA 7(a) Loan Program. The requirements of an SBA 7(a) loan are based on specific aspects of the business and its principals. There are also fees associated with SBA loans.
Buyer Frequently Asked Questions
1. Why do I have to sign a Non Disclosure Agreement (NDA) before getting information about a business?
This is done to protect the sellers business. Most owners do not want their employees, customers or competitors to know they are selling.
2. Why do I have to fill out a financial statement?
We only show listings to buyers based on their financial readiness to enter into an agreement.
3. What are my financing options?
SBA Guaranteed Loans - Many local and national lenders offer loans for the purchase of a business. These loans are guaranteed by the Small Business Administration (SBA) and are typically amortized over an 8 to 10 year period.
Seller Financing – Transactions may also involve a combination of Seller Financing and a SBA loan.
4. What is due diligence and who does it?
Due diligence happens after an offer has been made and accepted. The buyer acquires information and can conduct further analysis to determine whether or not to proceed with the transaction.
5. Should I hire an attorney or CPA?
It is a good idea to retain a business attorney and CPA for any legal or tax questions. Business advisors have general knowledge but are not licensed to give advice on tax or legal matters.