How to Buy a Business

Steps in Purchasing a Business

 

Meet with a Gateway M&A Business Intermediary

When you meet with a Business Intermediary they will discuss the process of purchasing a business; including funding sources, transaction type, and answer questions you have about the process. They will also need to discuss the type of business you are looking to purchase, the location, the profitability, and the amount of money you have for a down payment.

Review Business Information

The Business Intermediary will review the information in the Confidential Business Review. The information will include seller’s motivation, business activity, employee and staff information, equipment list, financial information and photos. You will have additional questions that will need to be answered in a meeting with the seller. The intermediary will arrange the meeting between yourself and the business owner.

Have a meeting with the Business Buyer and Seller

The Buyer Seller Meeting is where the buyer and seller will gain information about each other and the buyer will learn more about the company. You will need to develop a list of questions you have to make yourself comfortable to make an offer on the business or to make your decision not to move forward in the transaction. If you like the business and want to move forward it is time to make an offer.

Make an Offer to Purchase on the Business

There are two ways to make an offer to purchase on a business.  One is to use an Offer to Purchase with conditions and contingencies.  The second way is to use a non-binding Letter of Intent (LOI). An Offer to Purchase is typically a standardized form that is legally binding, but buyers will have conditions and contingencies that will be satisfied during due diligence. The Letter of Intent is a Non-Binding document that is typically letter format. Both of the Offers will be replaced by a Definitive Purchase Agreement when Due Diligence is completed.

Negotiate Offer to Purchase for the Business

Negotiation is a common part of any transaction. You will want to negotiate where the buyer and seller can both win in the end. If you are not flexible with your demands, you will have issues with purchasing any business.

Due Diligence to Investigate the Business

Due Diligence is the investigative phase of a transaction. You will want to get your advisors involved to review the financial, market and business information to make sure that the business will continue to be a viable business for you in the feature.

Definitive Purchase Agreement

When you have completed due diligence it is time to create the Definitive Purchase Agreement (DPA). The Definitive Purchase Agreement will be the document that transfers the ownership of the business.  It typically includes non-competes, representations, and promissory notes. These documents will need to be reviewed and approved by both the buyers and sellers advisors. Once all steps are satisfied we will have negotiated the Definitive Purchase Agreement.

Closing to Finalize the Purchase of the Business

In the Closing meeting any remaining documents (Leases, Bill of Sales, Assumed Name Certificates and others) that need to be signed are signed and funds are transferred.

Training and Transition to Learn the Business

The last phase of a transaction is the training and transition. Training typically lasts from a couple days to a few months, and is completed by the seller unless it is otherwise stated if the DPA.


Gateway Mergers and Acquisitions, LLC

1000 E. Belt Line Road
Suite 204
Carrollton, TX 75006
Phone: (972) 219-6961
Fax: (972) 242-2436

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