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Image of business people shaking hands and celebrating that an agreement has been reached

Pre-Purchase Process

Before you begin the buying process for a business, there are a few things for you to decide: is this the right time, and what do you wish to accomplish with the purchase?

Once you have decided to purchase a business, you must then assess the amount of money you have available to purchase your dream business. Retirement funds are a popular choice, and those funds can come to you tax deferred. Just ask your First Choice Business Broker for details. Another option may be provided by the seller, such as financing the purchase for a Buyer with 50% of the purchase price as a down payment.

A trained, full-time Business Broker at First Choice Business Brokers of Pittsburgh will help you to understand your options before purchasing a business. Your Business Broker will spend time with you, asking questions to understand your background and finances to help determine what type of business purchase might be the right fit for you.

Purchase Process

The Business Broker provide information on a variety of businesses. Once you have shown an interest in a particular business, you will be asked to sign a Confidentiality Agreement. If you have further interest in pursuing the business, your Broker will arrange a meeting or conference call between you and the Seller, in which you can ask any related questions about the Seller or their business. Be aware that you will likely be asked to provide proof of funds before any meetings are arranged.

The meeting is often held at the business location, allowing you to walk through and observe the business operation. Sometimes the seller prefers to meet with the buyer at our FCBB Pittsburgh office before going to the place of business.

If, after meeting the seller and viewing the business, you still have an interest, your Broker will arrange additional meetings or conference calls with the Seller to answer any lingering questions you may have prior to making an offer. Your First Choice Broker will then assist you in completing the offer, and he or she will present your offer to the Seller.

The offer will entail, among other clauses, an agreed-upon training period in addition to the Seller’s agreement not to start a competing business, along with many other items aimed at protecting the interests of both parties. Be prepared to write a check or to wire funds immediately upon acceptance for the greater of 10% of the purchase price, or $10,000 minimum. This amount is referred to as an EMD, or an Earnest Money Deposit. This check shall remain uncashed unless the offer is accepted. The provision of an Earnest Money Deposit demonstrates to the Seller that you are a serious buyer with the true intention of purchasing his or her business.

In the case that your offer is not accepted, you can usually expect a counteroffer from the Seller, a document that includes terms more acceptable to the Seller. If you approve the counteroffer, your Earnest Money Deposit (EMD) will be deposited into a Trust Account, and the purchasing process will begin.

Due Diligence Period

After acceptance, a Due Diligence Period will be initiated, during which you are able review the business financial statements and other pertinent information. If you are satisfied with the Seller’s records, the purchase process will commence via your signature on a statement that indicates you are satisfied with what you have seen and that your intention is to move forward with the sale. This statement is called a Due Diligence Release. If there is a significant amount of inventory in the business, a third-party inventory counting company will be contacted to conduct an independent count/value of the inventory at the Seller’s cost, if inventory is included in the purchase price.

After all additional contingencies are released by you, the completion of transaction is arranged through the third-party escrow company or an attorney.

Your First Choice Business Broker will be by your side every step of the way, helping to facilitate and navigate to ensure a smooth transition of ownership wherein you become the proud owner of this business. Congratulations!