• VERY CONFIDENTIAL TRANSACTION
    • Seller’s biggest fear is that their employees, customers or suppliers might discover that their business is for sale.
    • Public knowledge of a pending transaction would have a devastating effect on the ongoing operation of the business.
    • Buyer must agree to a confidentiality agreement
    • Buyer must indicate financial capability
  • USUALLY A “HUMAN” REASON FOR SELLING
    • Most buyers are suspicious “if it’s such a good business, then why are you selling”
    • Very good businesses come on the market for “human” reasons
    • Retirement, illness, burn-out, death in the family, relocation, divorce etc. etc.
  • VIRTUALLY NO BANK FINANCING FOR BUSINESS ACQUISITIONS
    • Banks are “asset lenders”
    • Most of the value in a business is in the goodwill and cash flow
    • Some SBA lending (stars have to be lined up perfectly)
    • 85% of transactions are “seller financed”
  • DOWN PAYMENT DRIVEN PROCESS
    • Unlike bank financing, seller financing requires a substantial down payment (40% to 70%) of selling price.  Buyer needs to identify their down payment capability (without any bank financing).
    • Down payment capability will drive the size of business they are able to buy.
  • RAPPORT DRIVEN PROCESS FOR A NUMBER OF REASONS
    • Seller financing – most sellers do not want to finance the transaction.  However, after seller has developed a comfort level with the buyer, they are much more open to financing.
    • Emotional transaction for the seller- employees are like family, customers and suppliers are friends and family and the business is their baby, they do not want to sell to just anybody.
    • Buyer must trust the seller – all statements by the seller cannot be verified.  Our advice is that “if you do not have a good gut felling for the seller, do not buy the business”!!
  • DIFFERENCES IN FINANCIAL REPORTING
    • Public corporations and companies are always striving to improve profits
    • Privately owned companies are always striving to lower profits, in order to minimize their tax liabilities
    • Because the motivations are exactly opposite, they are playing by a different set of rules