Buying-Selling

BUYING A BUSINESS

Food for Thought

1.”If you think you can, or think you cannot, you are right”  Henry Ford

2. Some wanna, some wanna wanna, but you gotta wanna to succeed.

3. The harder you work the luckier you get

4. Getting there is half the fun.

Finding the right Business

1. Look for opportunities, look hard and wide

2. Are you qualified, would you enjoy the challenge?

3. Find a knowledgeable Business Broker

4. Can you see yourself doing it, day after day?

5. Can you handle the investment and risk involved?

6. Does your family approve?

Take a look.

1. Do you like what you see, outside and inside?

2. Do you like the area, street, building, parking, access?

3. Meet the Seller (owner)

What to ask:

·   How long have you been at this location?

·   When did you start in this Business?

·   What did you do before?

·   How many employees, full and part time?

·   Square feet (sq. ft.) of facility?

·   Monthly rent including CAM (Common area and maintenance)?.

·   Annual sales?.

·   What can a new owner expect to make?

·   What will you do next?

What next?

1. Think about it, hard and long. But not too long!

2. Prepare a preliminary Letter of Intent

3. What is it worth?

4. Work with me (your Broker) to consider a reasonable price to pay.

5. Think about the value of the hard assets. Look at a complete list.

6. What can you expect to make (net discretionary income after all costs and expenses)

7. Submit a non-binding “offer” or Letter of Intent, subject to due diligence and a thorough review of everything.

8. Have the Seller accept!!!

Due Diligence

1. Provide a Non-disclosure and Confidentiality agreement.

2. Request copies of these documents:

·         Financial Statements (Balance Sheet and Income Statement)

·         Annual tax filings

·         Owner’s T4

·         GST filings

·         PST filings

·         Lease

·         Bank Statements and cancelled cheques

·         Deposit book.

·         Supplier list and invoices

10. Customer list and outstanding accounts

11. Price lists

12. Menus

13. Advertising information, etc.

Finally

SELLING A BUSINESS

1. Bring Financial Statements up to date.
2. Tidy up the facilities.
3. Gather documents needed for Buyer’s due diligence

• Financial Statements (Balance Sheet and Income Statement)
• Annual tax filings
• Owner’s T4
• GST filings
• PST filings
• Lease
• Bank Statements and cancelled cheques
• Deposit book.
• Supplier list and invoices
• Customer list and outstanding accounts
• Price lists
• Menus
• Advertising information Etc. etc            

4. Find a knowledgeable Business Broker (Me):

                       

• Take photos of the area, street, building inside and out, parking and access
• Prepare profile of business
• List hard assets.
• Prepare re-constructed pro-forma income statement.
• Povide a suitable asking price based on reasonable and realistic valuation criteria.
• Obtain agreement to “list” the business.
• Prepare Information package
• Prepare Advertising plan and copy
• Advertise
• Qualify potential Buyers
• Introduce buyers, show the Business.
• Obtain non-binding “offer” or Letter of Intent
• Assist in negotiations.
• Obtain agreement, subject to due diligence and finance.
• Assist Buyer to arrange financing.
• Assist with due diligence
• Deliver final offer to Buyer and Seller’s Lawyers to close transaction.

5. Pay me 8% commission on closing!
6. Get on with the rest of your life.