5 EASY STEPS TO BUYING A BUSINESS
STEP 3 – THE OFFER
Before making your offer, you need to decide what type of entity best suits the operation of your business.
You may offer as an individual, a partnership, a company (corporation), or corporation or individual acting on behalf of a trust (such as a family trust).
Your accountant can advise you on which format best suits your family and tax planning situation.
Your offer will be to buy the business: For a certain price – On a certain date – Subject to:
- Finance being approved by your bank
- Due Diligence and being satisfied with the claimed profitability
- In doing Due Diligence being satisfied with terms and conditions of the premises lease (and also the franchise terms – if the business is a franchise)
- All government licenses held by the business being transferrable to you at settlement.
- Satisfaction with staffing arrangements and staff transition to your stewardship
- Written assurance from the outgoing owner regarding a competitive restraint period
- Any other pre-conditions you wish to include such as environmental issues, supplier contracts assignments, product warranties etc.
The GMO broker will present your offer to the Seller and there may be either an acceptance or a counter offer.
GMO will mediate on any issues to achieve consensus and acceptance.
Once agreement is reached between Buyer and Seller, the business is then officially “under offer”.
Your deposit is paid into the GMO Trust Account, your Due Diligence will then commence and GMO will help you tick off “all the boxes” as you progress towards settlement.
You need to be aware that though a business can be your route to securing an excellent income and future, sometimes there are trade-offs and personal challenges to your family’s lifestyle to be prepared for.
- Some businesses involve long trading hours
- Will you have the personal skills for customer relationships?
- Are you able to manage staff?
- Have you considered your personal strengths and weaknesses – for instance is your strength in administration, in sales, or in the logistical operation of the business – and how will you handle the weaknesses you might have?
If you’re not familiar with running a business, we recommend discussing your plans with an accountant or an experienced banker as they can help you to equip yourself well. Remember that whilst a business is your route to securing an excellent income and building a better future for your family, sometimes there are trade-offs to be prepared for.