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Buying
a business - FAQs |
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Why should
I use a Business Broker? |
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Selling or buying
a business is one of the most important financial decisions
you will make. A Business Broker has the training and
expertise to guide you through the process in a comfortable
and efficient manner. He is a team player who will coordinate
the efforts of your professional advisors, such as attorneys
and accountants. He has handled many transactions and
understands the complexities of selling and buying a business.
During the process,
the Seller's job is to do what he does best, which is
to run the business as if he were going to keep it. The
Broker's job is to confidentially market the business,
find and screen the Buyers, educate them, negotiate the
terms of the sale and provide a buffer for the emotional
highs and lows that we all experience.
The Buyer benefits
because the Broker has already pre-qualified a business
before he lists it. He has psychologically prepared the
Seller for the sale. He has also done a lot of the legwork
to assemble the financial information and background
of the business. This helps to reduce some of the uncertainty
for the Buyer and make this search more efficient.
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How do you handle
confidentiality? |
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Transactions handled
by American Business Brokers are held parties. We require
that a prospective Buyer review and sign a non-disclosure
statement outlining his responsibility in having access
to a Seller's confidential information. This occurs before
any detailed information concerning a specific opportunity
is released. We are committed to protecting the confidentiality
of the business sale.
We understand that public knowledge
of a potential sale can affect the attitudes and
actions of customers, employees, competitors, lenders,
suppliers, or investors, and thus the value of the company.
We also want to safeguard the employment status of a
potential Buyer while he considers a very important change
for his future. Go to our Confidentiality
page for more information.
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Why buy a business
instead of starting one? |
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It may take more
money than time to buy a business. It takes more time than
money to start one. The break-even point for buying versus
starting a business is the cost to buy equipment, rent a
space, pay a staff, pay for advertising, establish contractual
relationships and support yourself while you are building
up a customer base.
If you buy an established business,
you have an income from the day you take over. You
already know what can be accomplished by the business.
If you start a business, you face a lot of uncertainty
over the success and desirability of your product or
service. Buying a business takes a lot of the risk out
of your decision
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What is the best business
to own? |
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Beauty
is in the eye of the beholder. Most Buyers want to own
a profitable, well-managed business in an industry that
holds a personal interest for them. On the other hand,
some Buyers may look for opportunities that offer turnaround
potential, where they can apply their special skills.
In general, there is no industry that is particularly
better than another. However, there are specific businesses
that are more successful than others - even in the same
industry.
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How is an offer structured? |
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Most businesses
sell for one-third to one-half down. The remainder is financed
by the Seller, by a bank or through family resources. Sellers
generally prefer to receive all cash at closing and some
Buyers are able and willing to accommodate them. However,
Buyers are usually trying to get the most bang for their
buck and will want to leverage their down payment into the
largest business they can buy.
Although, Buyers may want
to make a no-money or low-money down offer, it is
very rare that they will succeed. Usually a business
cannot earn enough to pay salary to the owner and service
such a level of debt. In addition, the lender, whether
it is the seller or a bank, wants the Buyer to show his
commitment to the business by having vested financial
interest in its success.
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What kind of financing
is available? |
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Seller financing
is usually the cheapest and easiest to obtain. It also
tells the Buyer that the seller has confidence in the
business. There are no loan fees and the interest rate
is usually lower than the bank rates, but the term of
the loan is often shorter. Seller notes make up the majority
of Buyer financing.
Banks will loan money
on businesses that show a strong earnings history on
the tax returns. They require a lot of documentations
and the payment of upfront fees. In recent years, bank
loans, which are guaranteed by the Small Business Administration,
have become very popular and more readily available.
If all else fails, family |
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How long does it take
to sell a business? |
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It usually takes
longer to sell a business than a house or a commercial building.
Because of the confidential nature of a business sale, a
business broker cannot put a For Sale sign on the window.
The average time to sell a business is usually between six
to eighteen months. However, there are exceptions.
Some
businesses may sell within a month of being put on
the market. Others may take several years to attract
the right Buyer. A business broker seeks out and talks
to Buyers everyday. The next one may be just right for
a particular business.
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How do you advertise
a business for sale? |
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American Business Brokers uses various vehicles to
market and advertise a Seller's business in the most confidential
and discreet method possible. At American Business Brokers
we realize the sensitivity of this issue and work diligently
to protect the Seller's employees and vendors from knowing
that their business is for sale.
At the present time
American Business Brokers uses a combination of internet
marketing, local marketing sometimes in the form of newspapers,
association publications and journals, referrals from
past clients, accountants, attorneys, real estate professionals
and have a strong data base of qualified Buyers. |
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| The list of questions could go on and
on so I'll stop here for now. Hopefully we anticipated
and answered most of your questions. If you have others,
just give us a call at 1-888-800-6898.
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American
Business Brokers
Business Brokers - Mergers & Acquisitions
Businesses for Sale - Business Consulting
Franchise Opportunities - Business Valuations
Phone: 888-800-6898 Fax: 305-574-0173
Email: info@AmericanBusinessBrokers.com

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