Experience CountsMy experience of personally handling over 300 transactions helps you. There's a good chance that I have sold the exact type of business you're looking at buying. This gives me powerful experience in writing contracts for specific industries, things to look for within the business and more. I hate filling out all those darn forms!Because there is no universal system in selling businesses and every Seller wants to keep his sale confidential, we're forced to have you sign what we call a "Non-disclosure". This form has two main purposes. It gives the seller assurance that you will not tell anyone about his business being for sale and that you will not talk to employees or vendors, landlord, etc. The seller is afraid they may loose some employees or customers if anyone finds out they may be considering selling. So do take a few moments and fill out the form and fax or e-mail it to us so we can fully disclose all the details on the business you're interested in. Once we have this form on file you do not have to fill out another. Click here to download our Non-disclosure Are the income and expense numbers real?
The age old question. There is no 100% way to verify numbers in all businesses. Usually How do I calculate the net income on a business?Everyone has a difference of opinion on this subject. The number one factor is to determine the gross sales of the business. If you can get that number, usually you can reasonably arrive at a net income or a projected net income. Tax returns are helpful, but are often hard to decipher and may contain other elements of a business that don't apply. An all cash business may be difficult to arrive at a true number. A business with regular customers, accounts, invoices, Credit cards purchases and other documents will be easier to attain a number. You will find that most Brokers and owners will represent a "Discretionary Earnings" number. What is that? They will take out of the expenses, unnecessary expenses like trips to Hawaii for pleasure, Personal cell phone bills, Personal car payments, Owners payroll, If help run, managers payroll and more. Most of the time you see a business's net represented as if the buyer worked the business full-time. Do we take over the existing lease or get a new lease?The vast majority of businesses that are for sale have some form of lease with time remaining on them. The current owner is responsible for this term on the lease usually even after they sell. Even in poor economic conditions the landlords have no reason to agree to reduce the amount of rent the business pays. The landlords must have something to gain or they usually won’t even consider it. If you’re counting on getting the rent reduced you must make that apart of your offer. If the business has a Month-to-Month lease or no lease, then you can start fresh with the landlord and negotiate the terms as apart of the sale. In all cases you should not purchase a business with less than a few years left on the lease.
Facts you may not know, but you should
This is just an example. There are tons of things to watch out for. This is a major benefit when I help you buy a business. How can you protect me in the sale?Our contracts are written to give you the most protection possible. Since I have sold over 300 businesses, I've experienced most issues with most types of businesses. I can inform you of possible problem areas of certain types of businesses. We write our contracts to allow you time to investigate the business without risking your money. How do you transfer a business?There are two main ways to take ownership in a business transaction. Most of the time you will use an escrow. By using an escrow, you protect yourself against past liabilities, liens, judgements, back sales tax, payroll tax and more. The IRS and the State can be very aggressive in coming after money they are owed if the seller does not pay it. The other method is primarely used when you buy the shares of the corporation of the business you're buying. This should be done by an experienced attorney. You should never buy a business without doing one of these two methods. There are serious risks if you don't. As always we recommend you consult your Attorney and/or CPA before making any commitments. Do I need experience in the type of business I buy?Experience is usually not required when you buy a business. Most Sellers of businesses will train you in all aspects of the business as a part of the sale. Do I need to qualify to buy a business?Yes. Almost every business you look at will involve some form of qualification requirements: The following are the most common:
How much money do I need to buy a business?That, of course, will depend on the price and terms. The SBA offers favorable terms with 15%-30% down and loan lengths up to 10 years. While most Buyers will qualify for an SBA loan, most businesses will not. The SBA will not allow many addbacks that most Buyers will remove from the expenses of the business. Very few businesses qualify for SBA assistance. By far the best terms are usually offered by the Seller. The Seller has a huge motivation to offer terms to entice the Buyer to buy. This can be used as a valuable negotiating tool in the transaction. For calculation purposes we'll use an example of a $100,000 purchase price and $50,000 Seller carry. These are just examples and averages. Please do not rely on these numbers: 1. $50,000 Down Payment 2. $1200.00 Escrow Fees 3. $3000.00 Lease security deposit 4. $3000.00 First Months Rent 5. $1500.00 Deposit to the State Board for sales tax* 6. $800.00 Deposit to the local utility* 7. $1550.00 Sales Tax on the equipment portion of your purchase (in this example it is $20,000 of the $100,000 purchase price at 7.75%) 8. $500.00 Lease transfer fee* 9. $5000.00 Franchise transfer fee* 10. $100.00 Personal Property Tax 11. $339-$2200 ABC Lic transfer fee. Click here for fee schedule 12. $200.00 Cash Drawer change(retail Businesses) On top of this you should have working capital in the bank. This will vary widely based on the specific business you’re buying. We can help you determine that number. *May not be required
The seven main reasons most Buyers wish to buy a Business are:
Remember that only about five-percent of the US population owns their own Business. Therefore, to successfully bridge the gap from employee to employer you need all the help you can get. If you are seriously looking to move into the arena of owning your own business we need to talk. We will assist you in determining the best type of business to fit your lifestyle needs. We take into consideration your financial position, your family life, education, work history, hobbies, and anything that will help us to ensure that you buy the right business for you. Remember, there is no room for on-the-job training when it comes to buying a business. You need an experienced broker to help you all the way. We do this without cost to you.
:: Sell your business :: Get an estimate on your businesses value :: See Past Sales :: Confidentiality :: Sites we advertise on :: Tips to help you sell your business :: Help Me Buy a Business :: Sign up to get new listings via e-mail :: Non-Disclosure :: Buyer Resources :: All Listings :: Preferred Lenders :: Calculators :: Monthly Payment Calculator :: Recommended Service Providers/Vendors :: Useful and Interesting Information :: Useful Links :: Contact :: Personal Info :: Guest Book :: Letters of Recommendation :: Awards ::
An Equal Opportunity Company. Equal Housing Opportunity. Prudential California Realty advises all clients to seek professional advise prior to making a purchase or sale decision.
An Independently Owned & Operated Member of the Prudential Real Estate Affiliates.
© 2010 Myers Internet All Rights Reserved Powered by: Myers Internet | Admin Login |
common sense will prevail in most instances. I can give you pointers on what to look for, but in the end you need to verify all the numbers to be sure you're comfortable with the purchase. We recommend you get independent legal, tax and other professional advice before you make your decision.
