Buyer FAQs

Business Buyers Frequently Asked Questions

Q. What about confidentiality?

A. Unlike the sale of real estate or franchises, the sale of an ongoing business is very confidential for both the seller and the buyer. All inquiries are held in strict confidence. Meetings are confidential, and Gateway M&A representatives are available after hours and on weekends. The need for confidentiality is a major reason to use Gateway M&A since it is very difficult for a business owner to screen possible buyers without disclosing their own identity or the identity of the business.

Q. How much down payment will I need?

A. The down payment amount varies depending on the type of business, the seller’s situation, and the buyer’s down payment ability. Selling businesses is truly a down payment driven industry. Typically, the higher down payment you can offer a seller the lower the total sale price of the business will be. Your Gateway M&A representative will discuss with you and figure out a comfortable level of cash investment you can commit to the right business. Your representative also is experienced enough to know that you cannot totally commit all of your available cash. You will need some for operating capital, deposits, and other requirements. We like to insure you have extra set aside for emergencies and unforeseen situations to give you a higher comfort level. If you are getting outside financing you can expect a 15 to 30 percent cash investment on your part. If the business is being owner financed it varies widely depending on the value of the hard assets within the business. (Hard assets would include: Furniture, Fixtures and Equipment (FF&E) as well as any inventory). A good rule of thumb is to expect to pay 1 to 1.5 times the annual owner’s discretionary earnings (owner’s cash flow) as a down payment. Knowing your comfort level of cash investment is the most important information that your M&A representative needs to know to match you with the right business. This allows our people to focus on businesses that are the right size.

Q. Why should I buy an existing business?

A. There are several reasons to buy an existing business: actual results rather than pro-forma, immediate cash flow, trained employees in place established suppliers and credit, established customers and referral business, existing licenses and permits, training by the seller and the availability of owner financing.

Q. Should I consider purchasing a franchise?

A. Some of the advantages of buying a franchise, known name means instant recognition of a proven product or service, ongoing support means you are in business for yourself but not by yourself, more than 90% of new franchises are successful, operating systems in place (lessons have already been learned at someone else’s expense), opportunity to add additional units within the franchise system, more flexibility in location, cost to get into a franchise is less than acquiring an existing business, training by the franchisor and the availability of financing programs established by the franchisor.

Q. What are some of the key things to consider when buying a business?

A. The main thing to consider is, “Do You Like The Business?” Additional considerations are: location, down payment, owner’s discretionary earnings, what kind of training (if any) will the seller provide, can the business be improved and what can be done that the current owner is not doing or has ceased doing because of “burn out” or lack of initiative and enthusiasm?

Q. What is the process for buying a business?

A. The process of buying an existing business is as follows:

1. Evaluate the basic information on alternative businesses that sound interesting to you.

2. Visit the business (if possible) without announcing yourself as a buyer (incognito) to get a “feel” for the business.

3. Coordinate with your Gateway M&A representative to meet with the Seller. Ask the seller general questions to probing questions on anything and everything, except actual price or terms.

4. Allow your Gateway M&A representative to show you how an offer would be made that will protect you and that you can use for your preliminary evaluation.

5. Do your preliminary evaluations, based on the information provided by the seller to Gateway M&A and to you.

6. Make an offer, assuming that all the information provided is correct, but include contingencies which will allow you to confirm such information. Gateway M&A will show you how to write an offer to protect you as the buyer.

7. Buyer and seller will seek competent counsel (legal, financial, tax, etc.) in any acquisition or sale of a business and/or of real property. Both parties understand and agree that “Broker Group” (herein defined as Broker and its agents, employees, officers, directors, shareholders, co-brokers, independent contractors and affiliates) WILL NOT PROVIDE ANY LEGAL, ACCOUNTING OR TAX ADVICE TO BUYER OR SELLER and will NOT provide any related services to the Parties acting as licensed attorneys, accountants or tax advisors. Buyer and Seller will seek counsel from an attorney, Certified Public Accountant, and any other parties necessary to make an informed decision regarding the purchase or sale of any business opportunity bought or sold through Gateway M&A.

8. Have documents prepared for closing. You may agree with the seller to share the cost of the closing attorney. This lawyer will not argue the position for either party, but drafts all necessary legal documents to comply with the agreement a buyer and seller have reached. Both parties involved will have engaged a transaction attorney for counsel.

9. Close the purchase, and begin your first day as the owner of your own business. The seller will assist in an orderly transition because most of their money is coming from your success.

Congratulations – You are a part of the American Dream – You and your family own your own business!!!

Q. Why should I use Gateway M&A to buy a business?

A. First, you will save time and money. Gateway M&A’s services are paid by the seller and we know what businesses are available. We can also guide you towards businesses in your price range. We know what the seller’s needs are and what your requirements are. Therefore, we can structure a transaction that benefits all parties involved. Gateway M&A representatives work professionally and confidentially and have experience in overcoming every imaginable obstacle. Our representatives can show you how to make an offer that protects you, and coordinate the process and handle the negotiations at “arms length”. This is important because after the closing you still need to work with the seller during the transition period. You certainly would not want any friction remaining from the negotiations. Let the Gateway M&A absorb any frictions and conflicts so that you and the seller can work harmoniously during the transition period. We know the process of getting all the documents prepared for closing to include lien searches, property tax searches and filing of UCCs. Our representatives can also assist you in getting organized to assume ownership.

Q. Can Gateway M&A help me if I don’t know what kind of business I want to buy?

A. Yes. Our representatives are trained to match the needs of the buyer with the businesses available on the market. There are 4 main components to help us find the right business for you. The most important factor is to find a business you like. We will assist you by learning about your areas of interest, past work experience, hobbies and background. We will present a number of different types of businesses and will be able to identify components of these businesses which will help focus on the business best suited to your liking. Finding a business you like is the most important step in the process. If you don’t like the business then move on until you find one that you like. The other factors include geographical location, amount of cash you are comfortable committing to an investment and the amount of compensation you need from the business. Our goal is to find a business you like, in the area you prefer, with the down payment you are comfortable committing and with the level of compensation required by you and your family. It also helps if you are truly serious about buying a business. If you have any doubts if you really want to buy a business and be your own boss then you should wait until you have resolved that question.

Q. How are negotiations handled?

A. All negotiations are handled at arm’s length through Gateway M&A. The primary reason is to maximize the price you can get for your business, but just as importantly is to facilitate a smooth transition of the business under new ownership. All negotiations can be stressful and after you have closed the transaction you and the new owner will have a good working relationship to begin the transition period. Let your Gateway M&A buffer any stressful negotiations. Our representatives have been trained and are experienced in negotiating successful terms and conditions for the transfer of businesses.

Q. What is the closing process?

A. Your Gateway M&A representative will recommend using a professional closing officer to prepare documents and facilitate the closing process. This improves the efficiency of getting the business transaction completed. While you will sell your business only one time, the closing organization closes hundreds. The advantage of the closing officer is that they represent the transaction and the best interest of both parties. It is very difficult, time consuming and expensive if either the buyer or seller have their attorneys prepare the documents. Gateway M&A strongly recommends taking all of these documents to a transaction attorney for review, edit and approval. Let your closing officer coordinate the process of getting lien searches, property tax settlements, bills of sale, escrow and closing instructions, non-compete agreements, offset agreements, security agreements, abandonment of assumed names, documentation of incorporation, settlement statements and the wide variety of documents which are specific to each different transaction. You should be able to prepare your business for the transfer while the closing officer is coordinating the preparation of the documents for the transaction.

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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