What is Due Diligence?
Due diligence is the process of getting to know a business thoroughly before you decide to buy it. It means reviewing the financials, operations, contracts, and records to confirm the business is what it was represented to be. It is the homework that protects your investment, and your FCBB advisor helps you work through it methodically before you close.
Why should I buy an existing business instead of starting my own?
An existing business gives you a meaningful head start. You are acquiring an operation that already works, with an established location, trained staff, existing customers, and cash flow, rather than building all of that from zero. For many buyers that translates to lower risk and a faster path to income, though it still requires careful evaluation of the specific business before you commit.
Why should I use a Business Broker to buy a business?
A business broker can introduce you to far more opportunities than you would find on your own, including businesses that are not openly advertised. In many transactions the seller pays the broker's commission, so working with a broker often does not add to your cost. Beyond access, your FCBB advisor helps you evaluate opportunities, structure an offer, negotiate terms, and coordinate the steps through closing.
Will I be able to get financing to buy a business?
Financing is often available, though it depends on the business, your background, and the deal structure. Conventional bank loans can be harder to secure for a business or industry you are new to. Many buyers use SBA-backed lending, seller financing where the seller carries part of the price, or retirement funding through a ROBS arrangement. Your FCBB advisor can help you understand which options fit your situation before you make an offer.
How do I make an offer on a business I want to purchase?
Your FCBB advisor guides you through the offer step by step. FCBB uses comprehensive purchase agreements designed to address both straightforward terms and more complex situations, so all parties are protected. Your advisor helps you set price, terms, and contingencies, then presents the offer to the seller on your behalf.
Do I need an attorney?
Having an attorney review the agreements is a sound idea, and your FCBB advisor will often recommend it. An attorney experienced in business transactions can review the contract language and help confirm the deal is structured to protect you.
How do Sellers come up with the price they are asking for their business?
When a seller works with a business broker, the asking price is typically set using established valuation methods, often based on the business's earnings, or a combination of income and assets, benchmarked against comparable sales. A well-prepared asking price reflects a realistic market value rather than a number pulled from thin air, which helps both buyer and seller reach a fair agreement.
Aren't most businesses for sale losing money?
No. It is a common misconception that businesses are sold only when they are struggling. In reality, healthy and profitable businesses come to market for many reasons: owners capitalizing on a successful operation, owners seeking a new challenge, changes in life circumstances such as relocation or health, retirement, partnership changes, and favorable market timing. A business being for sale is not a sign of trouble, and it may be a strong opportunity worth evaluating on its own merits.
Still have a question?
If your question is not answered here, reach out and Mike and Lynn Lee will walk through it with you. You can also call 435-800-4400 or email TeamSummit@FCBB.com.