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Buying A Business

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Every buyer puts a great deal of emphasis on the strategic factors. LLana Options Real Estate International Group works closely with you to present a clear understanding of the market, competition, the focus of the business, and proprietary advantages including technology, customer relationships, intellectual property, as well as human and physical resources.

Buying A Business

 

 

 

Buying A Business

The Buying Process

  1. Contact LLana Options Real Estate International Group to consult your the entire process.
  2. Confidentially go over your background and financial information.
  3. Review the businesses available that meets your needs and financial goal.
  4. Have a conference call with and/or meet the seller/owner.
  5. Make an offer to purchase, negotiate and reach an agreement.
  6. Due Diligence.
  7. Closing documents are prepared by the buyer and seller’s attorneys.
  8. An inventory is taken.
  9. A closing takes place.
  10. Seller trains the buyer for an agreed amount of time.

Exclusive Buyer Brokerage Agreement

At LLana Options Real Estate International Group we take it very seriously. Our clients come first. We commit to finding the right business and matching your desired terms with the seller’s. This search would involve doing an individualized search for you of businesses not on the market as well as those currently available. Good businesses go fast. Being the first to evaluate and make an offer on a business can be a major advantage.

You could do this by yourself, but let’s face it, that is what we do for living so we have the resources, tools and network. When a buyer/investor contacts listing brokers directly they are contacting the seller’s representative? And who will represent the buyer?

That’s why our “Exclusive Buyer Brokerage Agreement” is so relevant.

We can help. Thanks to our network, we can work with most brokers. Let us simplify the complexity and expedite the process for you.

We can assist you with our “Exclusive Buyer Brokerage Agreement”, providing invaluable expertise in your business search, business assessment process, financing, negotiation and closing activities. Or we can assist you with what is already on the market.

  • Do you need help working with Business Owners trying to sell without a Broker?
  • Do you need Professional Opinions of market value for options you are trying to evaluate?

Contact Us today to discuss your requirements.

Buying a Business FAQs

I Want to Buy a Business. Where do I start?

  • Contacting us for assistance is your best first step. We can be your consultant on a business you are already interested in or help you find it through our “Exclusive Buyer Brokerage Agreement”.
  • Weather you find a business on your own or with our assistance, and want to know more about it, we will contact the listing broker, who in turn will want to know some more about you (the prospective buyer) and may ask for some basic background information to assess your financial and experiential qualifications.
  • You will be asked to execute a Confidentiality Agreement (CA) or Non-Disclosure

Agreement (NDA) in order to have access to proprietary information. This information may sometimes include “small” things like the location. With some businesses, knowing what they do, and their location can easily give away their identity. Seller’s want to be protected and therefore the required paperwork.

  • After the Buyer has signed a CA or NDA, and if the buyer is a fit for the business, the broker will work with the buyer to provide all of the information he needs to make an informed decision on a given business opportunity.

What is Due Diligence and when do I do it?

  • After you have met the seller and analyzed the business information provided, and it meets your expectation the next step is to make an Offer to Purchase or provide a Letter of Intent (LOI), stating the terms of the intended transaction. As part of our consulting service, we will prepare the necessary documents for your review and execution, and submit to the Seller or designated representative. If the seller agrees and accepts your terms, then the Due Diligence is next.
  • Due Diligence is a limited period of time that follows an executed purchase contract for the buyer to deeply and in detailed manner review the entire business. It is a necessary investigation to determine if you will finally buy the business or walk away.
  • The buyer will want to verify that the business information received is accurate.

This includes at least review of the books & records of the business, inventory (if applicable), and and assets or equipment. Hiring the services of a CPA and commercial attorney are of most importance. Also, during Due Diligence, the seller many times will want to verify the buyer regarding his business experience, creditworthiness, and available liquid cash for the business down payment. This is especially critical when the seller is considering financing the buyer.

What about the Company Name?

  • The right to use the business name is part of the sale, almost always. You may not be buying the Corporation, but you are buying the DBA, or Doing Business As name. This is mostly done to take advantage of the goodwill if you are purchasing an existing business. It may very well be the reason you may want to buy the business.

How much is the business worth?

  • There is no simple answer or formula for evaluating the value of a business. Part of our job is to give a price range, based on experience with the market, rules of thumb, and an analysis of financial statements and cash flow. Final price is always subject to negotiation.
  • Sometimes price is determined by cash flow, rarely by assets, sometimes by goodwill or the DBA.
  • Other important factors to consider include: competition, industry trends, and like-size comparison with other companies in the industry, balance sheet ratios, income statement analysis and trends, gross and net margins, type and condition of equipment, and future capital requirements, customer base: target, size, quality, diversification, location, avenues of growth for the company under new ownership, owner’s role, now and after the sale financial needs and goals of the buyer and the seller, difficulty of someone else learning the business, and potential for growth in his business and in the industry as a whole.
  • That is why it’s so important to use us as your professional Business Broker.

When I buy a business, do I sign personally?

  • Although you may not want to sign personally to guarantee payment on a business purchase if there is financing involved, the seller or the bank will usually request your personal guarantee on any note. A good CPA can negotiate and work with your lawyer to minimize your personal exposure.

After I buy my business, what form do I file to apply for an Employer Identification Number (EIN)?

  • File Form SS-4. Ask your CPA for a copy of the form, or you may download the form from the IRS website

Finance Options for Buying a Business

There are many ways of financing, especially if the buyer is financially creative. These are the most common:

Bank Financing:

Banks lend against a buyer’s assets. They also lend against the assets of the business being purchased. The bank will also need to be comfortable with the viability, profitability and future of the business regardless of the asset value.

SBA Loans:

Most small to medium business purchases are financed by an SBA loan. The loan is actually obtained from a bank and is backed by the Small Business Administration. The SBA is a United States entity that has been in existence since the 1950’s. The 7a SBA program allows banks to finance offering more favorable terms than are normally available. Most banks offer terms of up to 10 years with no prepayment penalties. Business acquisitions that include commercial real estate can be financed for longer terms.

It is usually to the buyers advantage to work with an SBA preferred lender.

Seller Financing:

Although sellers like to get all cash at closing, their financing many times is what makes the deal happen. Buyers have more confidence in the decision to purchase when the seller is willing to finance. It is also a sign the seller is confident the business will profit enough to repay the debt.

Due Diligence Checklist

Once you have a purchase contract to buy a business your Certified Public Accountant (CPA) and Attorney will need documentation to determine if the business is earning what the seller represents and to make sure everything legal aspect is good. This list will vary depending on each industry.

  1. Tax Returns
  2. Profit & Loss statements
  3. Bank Statements
  4. Sales Tax Returns
  5. General Ledger
  6. Copy of Lease (if applicable)
  7. 940’s & 941’s payroll tax
  8. Employee list/job function/Rate of pay.
  9. Copy of insurance policies if any
  10. Equipment list

If the business is a cash business you will need:

  1. Purchase invoices
  2. Sales invoices
  3. Register tapes.

Tax return numbers are generally considered to be more accurate. In some cases the business may actually be earning more than the tax return shows.

Immigration & Visas

Types of Visas

LLana Options Real Estate International Group counts with a network of professionals to assist with immigration as well. These are the highlights, for reference purpose only.

There is more than one type of visa for someone who wants to own a business and live in the US. The most commonly used are E-2, L-1 and EB-5 visas.

Also, an individual who is legally in the US not holding any of the above (maybe as a visitor or student) can apply to change or adjust his/her visa.

E-2 and L-1 non-immigrant visas:

  1. An E-2 “Treaty Investor Visa”. A treaty must exist between the US and the country of the person seeking an E visa. For a complete list of countries with treaties for e-2 visas, please visit

http://travel.state.gov/content/visas/english/fees/treaty.html An E-2 visa should be considered if a foreign national wishes to come to the US to invest (buy a business, start a business, etc…)

  1. An L-1 Visa allows foreign companies to transfer employees temporarily to the

US in order to aid or initiate operations in the US. An individual who owns a business in another country and wants to start a business (or purchase an existing business) in the US and “transfer” himself to the US to run that business, the L visa should be considered.

EB-5 Visa:

  1. The EB-5 visa provides a method of streamlining and obtaining a green card for foreign nationals who invest money in the United States. To obtain the visa, individuals must invest $1,000,000 (or at least $500,000 in a Targeted

Employment Area – high unemployment or rural area), creating or preserving at least 10 jobs for U.S. workers excluding the investor and their immediate family. For such purpose there are Regional Centers throughout the US with community projects under way that have been approved by the Department of Homeland Security. (For additional information visit https://en.wikipedia.org/wiki/EB-5_visa)

SBA Loan Requirements

Download SBA Loan Requirements Document Here

Franchises

Opening a franchise is a great way to start your own business with less of the risk that comes with doing it alone. Finding viable franchises for sale is the first step. That’s where LLana Options Real Estate International Group comes in. By understanding your business objectives we help you narrow down the options to meet your criteria.

Why You Won’t Find a Franchise for Sale Using an Online Search

You could, but it’s also extremely time consuming and doesn’t provide the kind of details you need to make a decision. The franchisor will want to know about you in detail before providing any specifics and by the time you’ve shared your privacy it may not be what you’re looking for.

Finding a Franchise for Sale with Help from a Business Broker

LLana Options Real Estate International Group gets the details. We also find out the requirements of purchasing a specific franchise so you can determine if it is within your investment criteria. We will find the information and assist you in the analysis so you can make an informed decision.

Process for Buying Franchises for Sale

Our goal is to match you with the right business. To make that match, we use the following process:

  1. First Meeting. This is the time to gather information about you and your business interests. We use this data to focus our search on franchises that would be a good match for you.
  2. Evaluation. We will provide you with a list of suitable franchises and evaluate them together to narrow list only to those you want to pursue.
  3. Contact the Franchisor. We will arrange for phone or face to face interviews with the franchisor and help you fill out the official franchise application.
  4. Review the Franchise Disclosure Document (FDD). This document contains detailed financial and background information on the franchise and is extremely important to review and understand. We will at this time refer you to an attorney specialized in franchises.
  5. Make a Decision. After your research, meetings, and legal reviews, it’s time to make a decision.

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