Individual/Partnership Investors

If you are an individual, partnership or a small company who has never bought a business previously, there is a lot to learn.  We are happy to help with the process, and provide some of the fundamentals here, and on the following pages in the menu.

Confidentiality

Companies for sale are represented confidentially, and only potential buyers who have been pre-qualified are provided identifying information such as the company's name and location.  Sometimes, even certain details of their industry are masked to avoid inadvertently revealing the identity.
 
Prior to pre-qualification, we will happily share with you a confidential business profile on the company.  This is a one to two page document that will provide some basic information on it, such as its financial history, a short description and a bit about potential growth opportunities.  While it won't reveal the company's identity, it provides enough information to enable a prospective buyer to determine whether it is appropriate to move to the next step, "Prequalification," to receive the more detailed marketing materials on the company, financial reports, and the company name. 

Prequalification

Prequalification is a two step process:
  1. Signing a non-disclosure agreement, a contractual document that states that your use of the information is strictly for the purpose of evaluating the company for acquisition and that you will not share the information nor use it to the company's detriment in any way (such as competitively).
  2. Filling out a buyer profile form.  In addition to requesting your contact information and what you are interested in acquiring, this form asks about your work history and requires that you fill out a personal financial statement.  Inclusion of a resume is helpful.
This may seem like a lot of work to shop for a company.  We understand that and apologize in advance for the inconvenience, but please consider the following.
  • We have committed to the owners of the company we represent for sale to market their business confidentially to qualified, potential buyers.  Part of the way we earn our money is by avoiding bringing them unqualified buyers who will waste their time.
  • Prequalification minimizes exposure to their confidential financial data.  Potential buyers who are reluctant to reveal their personal financial information should consider that the seller is revealing the essential secrets of their company to potential buyers!  The requirement for sharing sensitive information freely is a two-way street among buyer and seller.
  • A very small percentage of the people who initially inquire about small companies for sale ever wind up making an offer.  Without a prequalification process, that number would be even smaller.  The process demonstrates to us and the seller that the potential buyer is serious.

Funds Required

Roughly, a buyer should be prepared to bring about 20% of the asking price of the company as their "cash" contribution to the deal, with the expectation that the remainder of the acquisition will be financed.  The 20% is just a starting point, and may be high or low, dependent upon many factors such as the buyer's credit history, and background running the same type of company. 
 
The "cash" required may come from sources such as a buyer's IRA or 401 K plan, or possibly home equity (though that will be trickier in today's economic climate and that equity will be carefully scrutinized). 
 
Are any deals done in which the buyer brings no funds to the transaction?  No.
 
We routinely help buyers secure acquisition financing and have contacts with a wide variety of lender types. 
 
If you are interested in buying a specific company, or actively searching for one,  please either contact Dick Bransford at (925) 838-8150 or via email and check the first button under Potential Acquirers.
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