specializes in the sale and valuation of mid-sized privately held
companies and small businesses. Established in 1958, Del Lingco
has helped thousands of entrepreneurs find a successful business
of their own. We know the necessary steps to complete a business
transfer and we will be there for you along the way.
OF BUYING A BUSINESS
- Ability to
review actual financials and existing growth rather than a pro-forma
of a startup.
- Seller training
cash flow and therefore reduced working capital requirements.
suppliers and credit. Existing licenses and permits.
- Sources of
capital to purchase an existing business are more available than
of owner financing in most cases.
- Trained employees
- The first
step in the process will be a personal interview in the office
with your Del Lingco Associate. He or she will discuss the business
offerings with you but only after a standard confidentiality agreement
has been signed. The discussion will also ascertain your goals,
desires, financial capability, work history and the type of business
you would be comfortable owning.
- Based on
your qualifications and criteria, a number of businesses will
be discussed and you will select which businesses you would like
- Your Del
Lingco associate will schedule a meeting with the seller. It is
imperative the Del lingco associate accompanies you to the business.
Usually, this occurs when the business is closed for confidentiality
reasons. Remember that the employees do not know the business
is for sale and any premature disclosure could cause harm to the
business you are buying.
- At the meeting,
feel free to discuss operational questions with the seller but
do not discuss financial matters. This is not the time or place.
Please keep all proprietary information regarding the business
confidential. Only discuss this information with your professional
advisors and spouse and remind them of the confidentiality aspect.
OFFER AND DUE DILIGENCE
At this point
you have reviewed the financial information on the business, visited
with the seller and have had your questions answered. You are now
ready to make an offer. Your Del Lingco associate will advise you
that we represent the seller, not the buyer. Also, we will suggest
you utilize an accountant for the due diligence and advise you on
tax and records of the business. We will also suggest you retain
the services of an attorney for legal and organizational requirements.
Your Del Lingco Associate will use a standard Purchase and Sale
Agreement. This agreement covers the basic and necessary elements
of a business transfer. It also provides important contingencies,
which must be met by certain time frames in order for this process
to go forward. For example:
The agreement specifically includes a contingency that all financial
records will be made available and buyer must be unconditionally
satisfied. Put simply, you will not be required to buy the business
unless you are satisfied with the financial records and representations.
The agreement specifies the lease will be assigned or a new lease
written in a manner acceptable to the buyer.
All equipment and fixtures will be in working order and free of
debt and liens.
All inventory must be saleable and of sufficient quantity. The sales
price will be adjusted according to the inventory valuation at cost.
The agreement provides for the owner to train the buyer at no charge,
for a certain period of time.
and Sale Agreement must include Earnest Money to be valid. The amount
will depend on the size of the business. Typically, for small to
mid-sized businesses the amount will be $5000 to $10,000. The business
will be taken off the market once accepted by the seller. The Earnest
Money will be promptly refunded if the contingencies are not met
to the buyer's satisfaction. If the contingencies are met and a
closing is scheduled, the Earnest Money will be credited and subtracted
from the down payment or cash due at closing.
Once all the
contingencies are released the escrow attorney will perform lien
searches and prepare the closing papers. Both buyer and seller are
advised to have the papers reviewed by their attorney. Your Del
Lingco Associate will coordinate all aspects of the closing process
to insure all the necessary documents are produced and completed
by the closing date. The cost of the closing papers are usually
split between the buyer and seller, and the seller is responsible
for the Brokers fee. Del Lingco takes great pride in helping business
buyers achieve the American dream of business ownership. We, too,
are entrepreneurs and appreciate and love the freedom and satisfaction
that can only come from owning your own business. You will never
work for anyone again.
You are now on your way!