Your research, conversations with key industry players, and searches on business listing sites should help you find some high-potential businesses that align with your interests and goals. Usually, you can learn a lot about those businesses by visiting their websites, reading news stories and press releases, and pouring through online reviews. Still, it can be tough to assess whether any option is a sound investment—at least, not without accessing its financials, records, and processes.
How can I access the information I need?
Most sellers aren’t willing to share their records with just anyone. They’ll want some assurance that you, as a potential buyer, are truly interested in buying their business. And, they want to know you can be trusted with their most confidential information.
There are ways to work through those concerns. To start, you’ll need to connect with the owner or the seller’s broker and explain your interest in the business. Here are three points you should plan to cover:
- Explain what you know about the business’s brand and its reputation in its market.
- Describe how your skills and background can serve the business and support its legacy.
- Express your desire to build upon the owner’s successes rather than impose drastic changes.
Sellers interested in moving forward will ask you to sign a nondisclosure agreement (NDA). By signing this standard, lawyer-drafted document, you affirm that you understand the seller’s desire for confidentiality. You also promise to respect it as you study the business’s financials, records, and trade secrets.
Once you return the NDA, the seller or the seller’s broker will release the documents you need to conduct a cursory examination of the business. This part of the acquisition process is important for two reasons. First, it’ll help you learn whether the business is a good candidate for purchase. And, second, it’ll provide you with an opportunity to build rapport with the seller.
|Rapport is a must. It can be the deciding factor for sellers who receive multiple similar offers. Plus, it can help you to establish the relationship you’ll need later, when you’re running the business and need some guidance.
After you connect with the owner of the business, you’ll begin a process known as preliminary due diligence. This guide can help you work through this important step:
Then, check out this guide for assessing whether a business’s asking price is fair and reasonable.
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