Here is a brief overview of a typical business purchase process, including some useful tips for you to consider (this is a guide only and some differences do occur between transactions):
- Decide on the type of business you are after (consider the returns, your budget, hours you want to work, location and your knowledge and experience – some franchises offer full training to people with no experience in a particular industry)
- Search for a suitable business (these can be found on business for sale websites, in newspapers and magazines, online newsletters etc)
- If you find a business that seems of interest, contact the seller’s broker to express your interest (only spend time inspecting and gathering information on businesses that really are of interest to you – a lot of work is involved in finding and buying a business and it is wise to only spend time on good prospects)
- You will probably be required to complete a confidentiality agreement at this stage (the seller is going to release very personal information to you and they want to be sure that it will be treated confidentially)
- Ask the seller or the seller’s agent to provide you with further details on the business. If the business still seems of interest, arrange to visit the business.
- Get your accountant and other advisors to review the business information and financials. Get an opinion on business value from your accountant or a business valuer.
- Make an offer and state that it is subject to due diligence, landlord approval and final finance approval.
- Once offer and details of the offer have been agreed, arrange for your accountant to conduct due diligence on the business financials.
- If everything checks out, the vendor’s solicitor will draft a contract
- You pay a deposit (usually 10% of the purchase price)
- Contracts are exchanged (in other words, contracts are signed)
- Landlord approval and lease transfer are arranged
- Training period starts
- Settlement – it is all yours!