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WHAT TO EXPECT DURING DUE DILIGENCE
BUYING A BUSINESS – WHAT YOU NEED TO KNOW
NEW LISTINGS AND SUCCESSFUL TRANSACTIONS
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What to Expect During Due Diligence
One of the first things a prospective buyer sees is the Business Listing Information sheet, or BLI. The BLI provides the buyer a wealth of data on the business of interest. The business owner has certified all data on the BLI is correct and supported by financial documents, leases, and other pertinent information. At this point in time, a buyer should assume that the information provided is accurate, but there are no guarantees. Sellers should expect buyers to thoroughly inspect the business. This is called "due diligence". Usually, before due diligence, an offer must be submitted and price and terms agreed. Most offers are subject to the buyer's satisfactory performance of "due diligence".
The Due Diligence process is the opportunity for the buyer to inspect all records of the business and verify that the information provided is correct.
The broker will arrange and attend meetings with the buyer and seller to review and discuss items of concern. The seller, buyer and broker understand those items need to be answered, or mitigated and all will collaborate to reach the best possible solution. If the buyer’s confidence level has not been satisfied, they may ask for further clarification, modify or withdraw their offer.
Due Diligence brings a balance to the process. We ask in the beginning that the buyer accept the information as represented. Later during the due diligence process the buyer can perform an exhaustive investigation to confirm that everything is as it should be.
The process may vary with the size of the business
Large businesses, e.g., Fortune 500, companies normally have only a handful of suitors that are qualified to buy them. Buyers are provided a prospectus and audited financial statements and they expect to complete due diligence prior to issuing a letter of intent. Large firms usually have teams of accounts & lawyers on staff to conduct the due diligence.
Small Business
are very different. A seller must not approach a small business as if it were a fortune 500 Company. Small businesses often
employ only a bookkeeper and sometimes the financial records are kept by the owners themselves. A CPA or Accountant may only be involved at tax time.
So what would happen to a small businesses when 30 to 100 unqualified buyers want to see financial records and perform due diligence in advance of an offer being presented? You can imagine how daunting and time consuming it would be for a seller to meet with each potential buyer and agree to their demands!
Florida Business Exchange can help initiate a quick, easy and successful sale. We will qualify potential buyers to ensure sellers only meet with serious buyers who have the experience and finances to succeed. In addition, we assist buyers and sellers through due diligence once an offer is accepted. This affords the seller time to do what they do best – run their business.
What you need to know when buying a business
Once a buyer expresses an initial interest in a business they will be asked to sign a confidentiality agreement – often referred to as the Non-Disclosure Agreement or simply "NDA". After this is signed and returned the buyer will receive a "BLI" or one page information sheet on the business. This sheet at a minimum should include the following key information.
•Name and address of business
•Asking price
•Annual sales
•Cost of goods
•Total expenses
•Owner benefit, including salary and other benefits
•Corporate structure
•Reason for sale
•Lease payment and terms
•Number of employees
•Operating hours
•Is the business a franchise
•Years established
•Years owned by seller
•Licenses or specialized skills required
•Dollar value of inventory on hand
•Opportunity for seller financing
•Value of furniture, fixtures and equipment
•Brief description of the business
Once a buyer expresses an initial interest in a business they will be asked to sign a confidentiality agreement – often referred to as the Non-Disclosure Agreement or simply "NDA". After this is signed and returned the buyer will receive a "BLI" or one page information sheet on the business. This sheet at a minimum should include the following key information.
Upon review of the provided information, if the Buyer remains interested, he will have the opportunity to meet with the Seller by phone or in person.
New Listings
Listing No: BBF-47800231
Historic Bed & Breakfast with Real Estate, Seminole County, FL
Listing No: BBF-47811034
Sports Bar, Manatee County, FL
Listing No: BBF-890707054
Movie Theater with Real Estate, Taylor County, FL
Listing No: BBF-76309918
Internet Services, Pinellas County, FL
Listing No: BBF-890707057
Grocery Store, Orange County, FL
Listing No: BBF-47809112
Janitorial Service, St. Johns County, FL
Listing No: BBF-75609098
Medical Software Business, Lee County, FL
Listing No: BBF-95311026
Successful Transactions
Massage Therapy Franchise, Duval County, FL
Anthony Rigney is proud to announce the sale of a Massage Therapy Franchise in Jacksonville, Florida. This business sold in 309 days for 43% of annual revenue and 2.9 times annual owner benefit.
Airline, Collier County, FL
Eric Gall is proud to announce the sale of a Air Charter / Airline in Collier County, Florida. This business sold in 145 days for 152% of annual revenue.
Roofing Contractor, Hillsborough County, FL.Chris Savage is proud to announce the sale of a Roofing Contractor in Hillsborough Co, Florida. This business sold in 29 days for 41% of annual revenue and 1.9 times annual owner benefit.
Irish Pub, Orange County, FL Bert Risdon is proud to announce the sale of a neighborhood Irish pub in Orange County, Florida. This pub sold in 132 days for 90% of annual revenue and 2.5 times annual owner benefit.
Other recent sales
Eric Gall sold an e-commerce business in Collier Co., FL for $15,000
Chris Savage sold an e-commerce advertising company in Pinellas Co, FL for $280,000
In the past 10 years, FBX has sold over 221 businesses for a total of $74,390,250. Combined with other broker's listings, we have sold well over $125,000,000. Contact your local FBX Intermediary for assistance in selling or buying your business today!
CHRIS SAVAGE
813-784-4457
cesavage@verizon.net
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