Business Buyer FAQs

1. Why do I have to sign a Non-Disclosure Agreement before I can receive information about a business? 2. The Non-Disclosure Agreements seem so one sided with no protection for the Buyer

  • All business sales are confidential. There is no advantage in disclosing the sale of the business to the employees, vendors, or to the customers until the sale of the business is completed. Therefore, it's imperative that any prospective buyers respect the importance of this fact. All prospective buyers are instructed to comply with the conditions of confidentiality and to not circumvent the Broker. Until a formal offer is made, the prospective Buyer is under no other obligation except not to disclose and not to circumvent. If you decide not to buy the business, you will not hear back from us as long as you don't disclose to anyone that the specific business is for sale. In some instances, we me ask the prospective Buyer to provide proof of I.D. Non Disclosure and Non-Circumvent Agreements are to be taken very seriously as there may be legal consequences against anyone who causes damage to the business by recklessly disclosing information about the business.
    3. Why do I have to provide a 'Financial Statement"?
  • To minimize exposure about the sale of the business, the Seller would like confidential information to be shared only with 'serious and qualified' people. A prospective Buyer may be serious but if he/she doesn't have the cash to procure the business, he is not qualified to buy it, and the Seller would not want to share any information with such a party. Therefore, requesting proof of funds is a reasonable request.
    4. Do I pay any commission to the Broker on the Purchase of the Business?
  • No. All commissions are paid by the Seller of the Business to the Broker he has listed the business for sale.
    5. Do you arrange financing? Can I buy a business with a down payment of 5%-10%?
  • Business Brokers are not Lenders, and most small businesses for sale do not qualify for a SBA loan. Any financing a Buyer may secure will be based upon his/her personal credit worthiness and a personal line of credit/home equity loan or savings are the typical ways for a Buyer to acquire the business. Frequently the Seller of the business will carry a note and finance a small part of the transaction. For most small businesses, the Buyer is expected to put down 50%-70% of the price if Seller financing is available at negotiated terms.
    6. Do you entertain LOIs (Letter of Intent)?
  • For most small businesses under $500,000, rather than a LOI, binding offers are made under an 'Asset Purchase Agreement'.
    7. What is the typical EMD (Earnest Money Deposit) that goes with the Purchase Offer?
  • If the Buyer is offering the asking price, it is customary to make an offer accompanied with a deposit of 10% of the offer. In instances where the Buyer offers less than the asking price, it's advantageous to make the deposit check for a higher amount so the Seller will give it serious consideration.
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