Buying Your Business in california
Buying a business in California is a delicate, nuanced, and personal process. If you’re uncomfortable with your current knowledge, the right advisor can best facilitate the process.
Buying a business in California is a delicate, nuanced, and personal process. If you’re uncomfortable with your current knowledge, the right advisor can best facilitate the process.
If you’re still unsure about what type of business you’d like to own or how best to invest your money, you should first read through our documents on the right – feel free to grab all of them, as they are free resources designed for your needs and education.
Once you’ve gotten the basics, decide the type of business and niche you’d like to buy into, including what your finances allow. Once you’re brimming with confidence (which is why we created this short educational section, I’ll be more than happy to help you make the final decision and lead you through the process. Enjoy your stay!
Finding the right businesses for yourself is much more complicated than it appears, in no small part because it often marks the turning of a new page and a new era in your life. Before you buy, ensure that the action supports your next move. A professional business adviser, such as myself, can help ensure you’ve made the right decision.
We’ve created a lengthy article explaining the intricate steps to buy a business. Still, if you choose to work with us, the list of necessary steps becomes much briefer: call us, sign a non-disclosure agreement (NDA), and tell us precisely what you’re looking for in a potential business investment. We take care of the rest. Going solo, you’ll need to learn how to navigate landlords, property management companies, lenders, accountants, attorneys, franchisors, business brokers, escrow companies, and other engaged parties.
In writing, you’ll need to convince the seller that you have the financial means and qualifications to be taken seriously and that you have the qualifications to evaluate the true worth of their business. You’ll need to identify potential shortcomings in their current business model and avoid the ‘money pits’ that’ll never yield a return on your investment.
It’s a challenging process, complete with headaches, and we can make it infinitely easier.
Most buyers start out looking for a business, which is a mistake. The number of sales companies is near-infinite, while the number of businesses that will suit you, your personality, and your set of skills is limited. To find the right company you would like to buy, it’s best to start with your strengths and weaknesses and determine what type of business would suit you best.
You’ll also want to determine your down payment and borrowing ability. These two factors will eliminate most businesses immediately, allowing you to zero in on the ones that will work for you. You’ll also want to look for any licenses you need and decide whether you (and your family) are willing to make some lifestyle changes, such as working different hours or relocating to a new geographic location.
You can start your search once you’ve squared away all these factors.
Start by identifying your business interest, such as retail, manufacturing, or food. Narrow your search from there by applying the parameters above: your financial means, your skills, your preferences, and your lifestyle needs. Once you have a few qualified candidates, dig a little deeper.
Review the Blind Executive Summary and decide if you want to learn more. If so, expect to sign an NDA or Confidentiality Agreement and provide a Personal Financial Statement to get access to review the Confidential Business Information. If you like what you see, you can ask to meet the seller and tour the business to see the day-to-day operations.
When you meet the seller, do a gut check and analyze your interest level as they show you around the business. Could you see yourself working here? Do you think you’d enjoy it? Do you have ideas for how to improve the business? If so, you may decide to make an Offer to Purchase.
If the seller is amenable, you’ll create and present an Asset Purchase Agreement or APA, which amounts to your formal offer. The APA is where you’ll negotiate as necessary to get the best possible purchase price for the business. Be careful; if you push too hard, the seller may decide he can get a better price elsewhere and walk away. Presenting yourself professionally increases your chances of closing the sale of your business.
The endgame is highly complex, marked by extensive paperwork and potential complications. You’ll start the Due Diligence process and move through it to qualify for financing, if needed. You’ll conduct a comprehensive review of the “Books and Records” and verify the license requirements or franchise agreements, as applicable. You may also need to secure a lease assignment or negotiate a new lease.
Finally, you’ll work with a licensed California escrow provider to conduct a bulk sale and meet other requirements.
If all goes smoothly, congratulations! You’ll now own your business.
Rogerson Business Services is a business brokerage service based in California.
If you’re ready to sell your California business, please let us know if you have any questions. Whether you are selling a medical practice, an HVAC business, a landscaping business, or any other business with gross revenue greater than $2 million, contact us today to learn about our successful selling your business program.
We’re happy to discuss the process of selling your business with you. Please give us a call or contact us when you’re ready.