You’re looking for the Perfect Business to purchase. One that’s producing Strong Earnings – with Excellent Cash-Flow, and has a Proven Track Record of Profits. Unfortunately, the very business your seeking to purchase – is NOT For Sale! In today’s World – with so many people struggling just to make their mortgage payment, or – simply feed their family, it’s highly unlikely that anyone will want to “give up” such any unusual “Cash Cow”, especially considering the fact that they can’t find a suitable replacement! Think about it, this is just common sense!
Why would anyone want to sell a business making “boatloads of cash”? Well – in truth, they usually don’t! Yet, this is the very business that most Buyers seek to purchase! In fact, during my 45 year career of Buying and Selling Businesses – if it’s one common trait I can guarantee to be true about most Buyers, it’s this simple fact: Every Buyer Is Seeking The Same “Golden Egg” Business – With Excellent Earnings, And A Proven Track Record Of Profits! The problem is – the very business they seek to purchase, is NOT For Sale!
Not to worry! Here are a few simple “Common Sense Solutions” to help would-be entrepreneurs meander through these treacherous waters:
Hire A Professional Business Broker: The word “Professional” cannot be over-stated. Keep in mind that most “Business Brokers” are not actually Licensed Real Estate Brokers. They simply use the word “Broker” in their title, because they are “Brokering” business transactions. With this thought in mind, ask the individual you choose to work with this simple question: “Are You A Licensed Real Estate ‘Broker‘, Or Just A Licensed Salesperson Selling Businesses?” This is very important, because it will help to clarify the individuals actual educational credentials, as well as clarify their true motivation to assist you.
Determine If The Salesperson is also representing the Seller: The concept of “Dual Agency” [A Broker who represents both the Buyer and Seller] is a very common practice in Real Estate. Basically, a Broker representing both parties in a transaction is placed in a very precarious situation – having to provide the very same level of Fiduciary Duty to both parties. Why is this problematic? Simply because if the Broker is treating both parties equally, there’s no chance that you [as the Buyer] should expect your Broker to “push hard” for a better purchase price, favorable Seller Financing, etc. In fact, a Broker who is acting as Dual Agent must be extremely careful not to favor one Client over another – and must essentially remain “100% Neutral” throughout the negotiating process.
Is this good for you, as the Buyer? Absolutely NOT! As the Buyer, you want your Broker to work aggressively towards protecting your best interests, which include, among other things – working hard to get you a lower purchase price! The problem is, most Business Brokers will insist that you sign a “Non-Disclosure Statement [NDA] prior to you receiving any information on any listing that you’ve expressed an interest in seeing. Once you sign their NDA, you are required [under terms of the agreement] to use the “Procuring Broker” as your broker, as well – which unfortunately is not in your best interest.
How do you avoid this? Simple! Hire a reputable firm that specializes in Exclusive Buyer Representation! If you do, you should expect to receive 100% of the Broker’s attention, and [most importantly] – AVOID HAVING THE BROKER ACT AS A DUAL AGENT!
Look For Businesses That Are Not Technically “FOR SALE“: Once you’ve mastered what’s previously been discussed, the next challenge you face is simply to locate a business that’s profitable, right? Well … the problem is … MOST BUSINESSES FOR SALE, ARE NOT PROFITABLE! In fact, instead of being profitable – they are usually hemorrhaging with expenses, and burdened with so much overhead they are barely making any money at all! That’s exactly why the Seller is trying to find a new Buyer! Not to worry, though. The simple solution is to look for business that are NOT “For Sale” – and attempt to negotiate with the business owner who has marginal interest in selling.
Confidential Private Sales: At BIZ Builder.Com, we refer to these types of business sales as “Confidential Private Sales”, because they involve business transactions that are very confidential and private. In most cases, the owner is not desperate to sell, at all. In fact, he/she is probably making a very good living, and is usually only interested in selling their business for personal reasons. Here’s just one example of what we mean:
Our Salesperson, “Sarah” – might have visited with a Mr. Jones, who is the proud owner of an ARCO ampm gas station in Orange County, CA for the past 7 several years. Sarah stops in regularly to say “hello” to Mr. Jones – and each time she does, Mr. Jones politely explains to Sarah that he has “absolutely no interest” in selling his business, which has regularly shown a 10%+ annual increase in sales, year over year. But, on Sarah’s last visit – Mr. Jones informed her that he was speaking with his wife last evening, and was reminded that his daughter will soon graduate from College. Mr. Jones’ wife suggested that next year might be a good time to retire, and so … he’s decided that he will consider selling his very profitable business in approximately 1 year. Fast forward 9 months, and Sarah recalls her previous conversation with Mr. Jones. She knows that Mr. Jones is “open to the possibility” of selling his business! He hasn’t listed it for sale yet – but, Sarah knows that he’s “open” to considering offers from interested Buyers!
This is exactly what we consider a Confidential Private Sale to be. It’s completely “confidential”, because it’s not currently listed for sale. There are no advertisements. No promotions, or even discussions with others – about the business, itself. Just a simple conversation that Sarah had with Mr. Jones 9 months ago.
Exclusive Representation: After all we’ve discussed – it’s important to understand that having a Business Broker represent you “Exclusively” [and NOT represent the Seller] is a critical factor in your ability to achieve a successful negotiated purchase. Now – as an Exclusive Client at BIZ Builder.Com – Sarah contacts you, directly – and advises the details of this business opportunity. You’re very interested – and, the good news is, You Don’t Have To Compete With Other Buyers To Negotiate A Favorable Transaction! There’s no one else that even knows that this business will soon be on the market! Now – this is an opportunity worth pursuing!
To learn more about Exclusive Representation and Confidential Private Sales, please feel free to contact us anytime at 1-800-727-2100, Option 1.