REAL ESTATE INVESTMENTS AND BUSINESS OPPORTUNITIES
.BUYING vs. STARTUP
Most established businesses continue to be successful. Here are some reason why: A Proven location, the Right Product and Market, positive cash flow , management
If you want to get into business, let someone else take the risk and high cost of starting from scratch. Buying an established business provides you with two of the necessary components of success: a proven location (customer base) and the right product.
. EARNEST MONEY
Earnest money is evidence of a buyer’s seriousness when making an offer on a business. In return, the seller takes the business off the market while the buyer removes the contingencies in the offer. If any of the contingencies are not removed,the earnest money is returned to the buyer.
Indicates Sellers you are a serious Buyer.
Held in a Trust account, which is regulated by the State.
Buyer must be completely satisfied before removing contingencies.
Earnest money is returned if your contingencies are not removed in the specific time
.WHAT IS AN OFFER?
An offer is just that, an offer. If it is not accepted by the seller within the time limit you set, your offer is void.
Most offers are contingent offers - that is, they become void unless certain things happen.
All offers are contingent upon: Your price and terms being accepted.
An offer could also be contingent upon:
Books and records meeting your satisfaction
All equipment being in working condition
Assignment of lease
The business being sold free and clear of debt
Ability to get necessary inspections
If any of the contingencies in an offer are not met within the time frame you set, the offer is void and your deposit is returned to you
Most offers are also conditioned upon certain promises by the seller, Such as:
Seller providing a non-compete agreement.
Seller agreeing to a specified training period.
.THE FINANCIAL REVIEW
The financial review need not be complicated, but the process does generate questions from buyers and sellers. Some typical questions from buyers are:
1. What is it? You have the opportunity to check out the books and records of the business and verify the information that you have already seen and heard. You may also have additional questions for the seller. If you are satisfied with the information you see, you release the financial contingency and proceed to the next step in your purchase of the business.
2. How long does it take? It's up to you. Many businesses can be checked out in one meeting. More complex businesses can take longer.
3. What if I find something I don't like? The contingencies in the offer have to be met. If not, you have the right to make a different offer, cancel your offer and get your earnest money refunded, and look at another business.
4. Why not do the financial review before I make an offer? Some buyers have expressed a desire to perform a detailed financial audit before making an offer. Later they found that the audit didn't replace the need to be comfortable with the business and be truly interested in it. They wasted a lot of time and money analyzing the books, only to find that they couldn't agree with the seller on price and terms, or that the type of business just didn not suit them. We developed the financial review contingency as a compromise to bridge the gap between the buyer's concerns and the seller's needs.
We understand the buyers need to verify the books before buying the business. We also know that it could damage the seller to have confidential information released to strangers or potential competitors. By using the financial review contingency, a buyer can make an offer in perfect safety and the seller is assured that he is dealing with a serious party.
Contingencies give you the flexibility to negotiate price and terms with the seller, but not be obligated to proceed with the sale unless certain things happen to your satisfaction.
For example, most offers are contingent upon financial review. If your review of the financial records turned up something you didn't like, you would not remove the contingency. Therefore, you would not be obligated to proceed with the sale and earnest money would be returned.
If you choose not to remove a contingency, you have complete freedom to:
1. Make a different offer on the same business.
2. Make an offer on a different business
3. Cancel the offer and get your earnest money returned.
.GETTING THE BEST PRICE
What Sellers Like to See
Buying a business is not easy and you will have questions and concerns. Selling a business creates just as many questions and concerns for the seller. You can often get significantly better prices and terms by being aware of the Seller’s needs and removing some of their uncertainties.
1. Resumes and Financial Statement. The more information the seller has on your past experience, qualifications and financial situation, the more likely he will accept an offer you make. By extending financing to you, the seller is acting as your banker, and he needs to feel comfortable with you. Remember, once the seller accepts your offer he is committed, but you still have contingencies to remove before moving ahead.
2. A Fair Offer. A fair offer is one that realistically satisfies the needs of both buyer and seller. Sometimes that results in an offer, which is quite different from the listed price and terms. Your broker will help develop a win-win offer. A word of caution: What about “low ball” offers? Sometimes they damage your relationship with the seller. This could result in reducing your chances of getting the business for a fair price.
3. Reasonable Down Payment. Every buyer wants to conserve cash. But, a very low down payment can indicate a buyer’s lack of commitment to the business. The number one concern of sellers is the safety of taking a note from the buyer if the seller questions a buyer’s commitment or seriousness about the business; the seller may not negotiate seriously with that buyer
4. Quick Removal of Contingencies. It's to everyone's advantage to proceed through the contingency removal phase in a quick but thorough fashion.
.TRANSFERRING THE BUSINESS
We recommend the use of experienced Escrow Attorneys to assist & protect the buyer/seller and broker when transferring the ownership of the business between buyer and seller. Escrow Attorneys are specialists in the field of business transfers and perform their services at very competitive rates.
The Escrow Attorney
Is completely neutral. He represents neither the buyer nor the seller. He will not represent one party against the other and he does not represent the broker.
Creates all necessary closing documents.
Performs a lien search on the business to make sure clear title can be conveyed
Prorates and pays the rent, deposits, taxes and other expenses if requested.
Makes sure that secured creditors are satisfied.
Files and records documents with appropriate authorities.
At Ameribusiness we provide an independent and objective valuation of your business.
1. Purpose of Business Evaluation: Estate Planning, Estate Valuation, Bankruptcy, Loan Application, Insurance Purpose, Condemnation, Business Damages, Dissolution of Marriage, Partnership and Contemplated Sale of Business.
2. Business valuation: The concept of rate of return on the investment as it relates to the quality of the cash flow generated by the business. In the valuation process the estimated value is based upon the quantity of the past and the strength of the future Income Stream. Income Stream consists of the depth and strength of the cash flow.
3. Businesses are valuated based upon the following values:
- Value of the business assets, appraised separately or as part of an on-going-concern, values may change greatly depending on whether the valuation basis is for acquisition or replacement, continued use or liquidation.
- Value based upon liquidation
- The business enterprise may have a higher value in liquidation than for continued operation as an on-going-concern. If liquidation is the indicated basis for the valuation, real estate and personal property must be valued using the appropriate methods.
- Value as on-going-concern
- The present value of the expected future stream of income, what would a buyer pay today for profits to be received next year, the year after that, discounted by an interest rate that reflects inflation expectation.
4. Value to be Estimated.
- Liquidation value: the estimated net proceeds from the sale of the tangible assets of a business sold separately from the business as an on-going-concern individually or as a group, forced or orderly disposal liquidation.
- Book value: value of all the tangible assets of the business as stated in the owner’s financial or accounting records, may be influenced by tax considerations.
- Economic value: the relationship between an object or function and its ability to generate monetary benefits..
Do you want to live, enjoy and invest for you and your family in the prosperity, security, quality of life and opportunities that the United States has to offer?
You can do it with Ameribusiness we have the knowledge and experience to assist you in the process and help you reach your goals.
A foreign investment in business and real estate in the United States for immigration purposes is something that we know. Ameribusiness can help you invest in a business, and get your investors visa and permanent residence.
Our professional team of lawyers, accountants and business specialists will design an investment and immigration strategy for you and your family.
Ameribusiness realizes that trust and discretion are very important for our clients and confidentiality is crucial to the success of the transaction. All inquiries, information and negotiations are kept in the strictest confidence through the use of secure and dedicated confidentiality agreements. Get your Investment Visa
BUYING A BUSINESS
Millions of owners of small and growing companies can not be wrong! If you are motivated by personal accomplishment, stimulated by challenge, and want to be your own boss, then business ownership is for you.
We are committed into finding good businesses and introducing them to qualified buyers. Our most important goal is for each transaction to stand the test of time and benefit both buyer and seller over the long term.
We realize that finding and buying a good business is not easy. This guide is designed to answer many of your questions and provide you with valuable information.
Congratulations on taking the first step to owning your own business.
GUIDE TO BUY A BUSINESS WITH US