Click here to contact us about buying a business

Are you Considering Buying a Business?

Buying a business is a long process. Prior to go into the process of buying a business, you need to be extremely commited to the process. What this means is you already made the decision to run your own business vs. working for someone else. Please read through all the frequently asked questions below.

Click here to down the the NDA and buyer confidential form. Please fax completed form to 415-762-9263..

Q: What are steps of business buying process?

Step 1: Buyer Commitment:

Your commitment to be honest and diligent while going through the business buying process. Prior to talking to a broker about buying a business, you need to make a commitment that you both want to buy a business. This means you already investigated different pros and cons of buying a business vs. getting a job etc.

Step 2: Non-Disclosure Statement:

You sign an NDA agreement promising to maintain confidentiality for all the information provided to you on the businesses we discuss. Click here to download the NDA and Buyer Confidential Form.

Step 3: Buyer Pre-Qualification:

You provide us with information about yourself, such as contact information, background, types of businesses desired, regions desired, and financial information. Sometimes the Seller will further require a resume and financial statement before releasing all information. The more we know about you, the more likely we can find a business you will like. The more information we provide to the seller, the better the terms he will consider. Plus, once your confidential information has been entered into our database, we will be able to contact you anytime that a new listing comes in matching your requirements.

Step 4: Business Showing:

We show you the businesses you are interested in and discuss the important factors of each.

Step 5: Meeting with the Seller:

A meeting between you, the seller and us may take place. This gives you the chance to ask questions you may have about how the business operates and to describe your qualifications to the seller.

Step 6: Offer to Purchase:

You write, with our assistance, an Offer For Purchase Agreement or Letter Of Intent for the business you like. The offer will include:
A. A refundable earnest money deposit to demonstrate your seriousness to the seller.
B. Contingencies such as: satisfactory review of books and records, the assignment of a lease that is satisfactory to you, and any other contingency that you would like answered. The offer is not binding until you have removed all contingencies.

Step 7: Seller Acceptance:

The seller accepts the offer as it is written or writes a counter offer.

Step 8: Buyer Due Diligence:

Purchasers will diligently address any and all contingencies specified in their Offer to Purchase.

Step 9: Contingency Removal:

Once you have reviewed and accepted all contingencies, you remove all contingencies in the Agreement. This includes getting the proper financing to purchase the business. It is now a binding agreement and your earnest money becomes non-refundable.

Step 10: Business Closing:

Closing normally takes place at a third party escrow company. In some cases, a third party attorney will draft an Asset Purchase Agreement for each party legal representative to review. After finalizing the Asset Purchase Agreement, a formal closing will be held.

Congratulations! You are now the new owner of your own business

Q: What is a Business Advisor?

A:A Business Advisor or advisor helps people buy or sell a business. This includes retail shops, restaurants, franchises, service businesses like distributing and printing, all kinds of manufacturing, laundries, and many more.

Q: Our resources are limited, does Bay Business Investment sell small businesses?

A:Bay Business Investment will sell businesses that list for under $50,000 and businesses that sell for $30,000,000 or more. Many businesses offer very attractive terms with low down payments and owner financing. So, even if you have limited resources, you still may be able to purchase your own business.

Q: Does Bay Business Investment only sell business in San Francisco?

A:No. Although we specialize in businesses around the greater Bay Area, we can work with business anywhere. In fact, we have businesses listed that are in other parts of California and from other states. A large percentage of buyers and sellers come from other parts of the country as well as foreign countries.

Q: What does it cost to use Bay Business Investment?

A: There is no fee charge for buyers. If a buyer is looking for an exclusive search service, we do have a buyer representation program with a retainer fee. There is also no fee or charge for a seller to have a consultation with us, or for a seller to list a business for sale with us. Our compensation is in the form of a commission earned when we successfully bring a ready, willing and able buyer together with a business owner.

Q: What about confidentiality?

A: Unlike the sale of real estate or franchises, the sale of an ongoing business is very confidential for both the seller and the buyer. All inquiries are held in strict confidence. Meetings are confidential, and Bay Business Investment Business Advisors are available after hours and on weekends. The need for confidentiality is a major reason to use a Bay Business Investment Business Advisor since it is very difficult for a business owner to screen possible buyers without disclosing their own identity or the identity of the business.

Because every business transaction is confidential, every potential buyer is required to sign a Non-Disclosure Agreement and fill out the buyer profile. For higher priced businesses, a full financial profile is also required.

Click here to download the NDA and the buyer profile

Click here to download the financial statement form

Please faxed completed forms to (415) 762-9263.

Q: How much downpayment will I need?

A: The downpayment amount varies depending on the type of business, the sellers situation and the buyers downpayment ability. Selling businesses is truly a downpayment driven industry. Typically, the more downpayment you can offer a seller the lower the total sale price of the business. Your Bay Business Investment Business Advisor will discuss with you the level of cash investment you are comfortable committing to the right business. The normal rule of thumb is the downpayment should be one time seller discretionary cashflow (SDC).

Q: Why should I buy an existing business?

A: There are several reasons to buy an existing business: Actual results rather than pro-forma. Immediate cash flow. Trained employees in place. Established suppliers and credit. Established customers and referral business. Existing licenses and permits. Training by the seller. The availablity of owner financing.

Q: Should I consider a franchise?

A: Some of the advantages of buying a franchise: Known name means instant recognition Proven product or service. Ongoing support means you are in business for yourself but not by yourself. Better than 90% of new franchises are successful. Operating system in place - lessons have already been learned at someone elses expense. Opportunity to add additional units within the franchise system. More flexibility in location. Cost to get into a franchise is less than an existing business. Training by the franchisor. The availablity of financing programs established by the franchisor.

Q: What are some of the key things to consider when buying a business?

A: The main thing to consider is, Do You Like The Business?" Additional considerations are: location, downpayment and owner's discretionary income. What training will the seller provide? Can I improve on the business? What can I do that the current owner is not doing or has ceased doing because of "burn out" or lack of initiative and enthusiasm?

Q: Why should I use a broker to buy a business?

A: First, you will save time and money. A broker's services are paid by the seller and the broker knows what businesses are available. The broker knows which businesses are in your price range. The broker knows what the seller's needs are and what your requirements are. Therefore, a broker can structure a transaction that is good for all parties involved. The broker works professionally and confidentially and has experience in overcoming every imaginable obstacle. The broker can show you how to make an offer that protects you. He can coordinate the process and handle the negotiations at "arms length". this is important because after the closing you still need to work with the seller during the transition period. You certainly would not want any friction remaining from the negotiations. Let the broker absorb any frictions and conflicts so that you and the seller can work harmoniously during the transition period. The broker knows the process to include getting all the documents prepared for closing to include lien searches, property tax searches and filing of UCCs. The broker can also assist you in getting organized to assume ownership.

Q: Can a broker help me if I don't know what kind of business I want to buy?

A: Yes, a broker is trained to match the needs of the buyer with the businesses available on the market. There are 4 main components to help the broker find the right business for you. The most important factor is to find a business you like. Your broker will assist by learning about your areas of interest, past work experience, hobbies and background. The broker will present a number of different types of businesses and will be able to identify components of these businesses which will help focus on the business best suited to your liking. Finding a business you like is the most important step in the process. If you don't like the business then move on until you find one that you like. The other factors include geographical location, amount of cash you are comfortable committing to an investment and the amount of compensation you need from the business. Our goal is to find a business you like, in the area you prefer, with the downpayment you are comfortable committing and with the level of compensation required by you and your family. It also helps if you are truly serious about buying a business. If you have any doubts if you really want to buy a business and be your own boss then you should wait until you have resolved that question.

We offer a buyer representation program that can help you find the business you are looking for. We will do all the work based on your search criteria. Please click here for more information.

Q: How are negotiations handled?

A: All negotiations are handled at arms length through your Bay Business Investment Business Advisor. The primary reason is to maximize the price you can get for your business, but just as importantly is to facilitate a smooth transition of the business under new ownership. All negotiations can be stressful and after you have closed the transaction you and the new owner will have a good working relationship to begin the transition period. Let your broker buffer any stressful negotiations. Your Bay Business Investment Broker has been trained and is experienced in negotiating successful terms and conditions for the transfer of businesses.

Q: What is the closing process?

A: Your Bay Business Investment Business Advisor will recommend using a professional closing officer. This improves the efficiency of getting the business transaction completed. While you will sell your business only one time, the closing organization closes hundreds. The advantage of the closing officer is that they represent the transaction and the best interest of both parties. It is very difficult, time consuming and expensive if either the buyer or seller have their attorneys prepare the documents. Let your Bay Business Investment Business Advisor coordinate the process of getting lien searches, property tax settlements, bills of sale, escrow and closing instructions, non-compete agreements, offset agreements, security agreements, abandonment of assumed names, documentation of incorporation, settlement statements and the wide variety of documents which are specific to each different transaction. You should be able to prepare your business for the transfer while the broker is coordinating the preparation of the documents for the transaction.

Q: I would think only businesses for sale are the ones losing money. Does Bay Business Investment sell businesses that are making money?

A: This is a very common, but erroneous belief. The great majority of businesses for sale are being sold for what is known as human reasons, rather than financial ones. Human reasons include things like illness or death of the owner or in the owner’s family, divorce, a desire to do something different, a desire to retire, or just plain burn-out. Generally speaking, a business does not survive for several years if it is losing money consistently. However, most business owners will take advantage of every opportunity that is legally available to reduce the taxes the business pays. Therefore, it is necessary to determine the total owner’s benefit to fully understand the financial health of the business. The answer is yes, we offer for sale many, many businesses that are earning a profit.