This sequence helps you avoid paying more than a business is worth or improperly financing your acquisition of it.
1. Establish criteria for the business you will buy.
2. Establish your “buying” team. A one-man-show is not credible to a seller.
3. Revise your resume to the format favored by sellers; identify your team.
4. Adapt your financial statement for sellers.
5. Understand the elements of negotiations that will arise. Don’t wing it!
6. Devise search system to attract sellers.
7. Role-play your interviewing technique before meeting sellers and brokers.
8. Present seller with a nonbinding letter of intent containing a request for documents.
9. Analyze documents solicited by the letter of intent, beginning with the premise’s lease.
10. Start your financial analysis, to include pre- and post-purchase cash flow scenarios.
11. Obtain a Solvency Opinion to know if the seller’s asking terms violate fraudulent conveyance statutes.
12. Preliminarily appraise value.
13. Continue gathering data.
14. Always have several businesses in analysis.
15. Identify alternate deal structures and financing scenarios.
16. Analyze CELBS, the five categories of nonfinancial factors, which influence value: Customers, Employees, Landlord, Bank, Suppliers.
17. Update the valuation and alternative financing scenarios; begin negotiations. Hire a third party “wear the black hat.”
18. “Hand-shake” agreement, on significant terms of purchase, between you and seller.
19. Finish due diligence. It’s unwise conduct in-depth substantiation of facts before the hand-shake with the seller.
20. Finalize valuation and structure the terms of purchase. A third-party report on letterhead is convincing.
21. Propose a purchase offer to the seller. Before this point it is presumptuous for you to disagree with the seller on price or terms because you could not have known everything the seller knew upon which he based his asking terms.
22. Instruct your attorney to prepare purchase contracts; verify tax strategy with your CPA.
Contact
John Martinka at Business Resource Group, Inc. — (425) 576-1814 or john@johnmartinka.com
www.johnmartinka.com
To go back to the seminar information and registration page click here