M&A Transaction Related Questions

Frequently Asked Questions

We invite you to contact us with any M&A transaction related questions

Answers to Individual Buyers’ Common Questions

Q:  Why is confidentiality so important?
It is critical that you maintain confidentiality throughout your business acquisition. You want to buy a stable businesses. If employees learn that their employer is for sale, they may seek other employment to protect their income. Customers may begin to favor other sources for your products or services. Key suppliers may begin seeking alternate channels to the market. Any of these events can erode business performance and stability, which translates to increased risk for you and the seller.

Q: Is there something wrong with a business that is for sale?

No, there are many good reasons that business owners decide to exit ownership. Retirement is probably most common. Health, burn-out, boredom, relocation, partner breakup, death of a family member and divorce are other common personal reasons. There are also a number of strategic business reasons for selling or merging companies.

Q: I completed a confidentiality agreement for an Exit Strategies deal. Do I have to complete another to review a new opportunity?
Yes. We require a confidentiality agreement that is specific to the business of interest.

Q: Why must I fill out a Questionnaire?
This helps us understand the match between the business for sale and your needs and ability to finance the proposed transaction. It saves everyone valuable time and protects the business. We only give out sensitive, confidential information when we see a fit. Also, understanding your circumstances and desired business characteristics can help us match you with future acquisition opportunities.

Q: I read the Confidential Information Memorandum (CIM) and I am interested. Now what?
The last page of our CIM outlines specific next steps for each business.

Q: How can I be informed of new acquisition opportunities?
Register by completing the appropriate Questionnaire (see right column). You receive Email notifications as we add opportunities that match your specifications. You can opt out any time.

Q: What can I do if I’m not finding the right acquisition opportunities?
Contact us regarding a Strategic Acquisition Search.

Q: Is it practical for me/us to acquire a business at this time?
There are many factors to consider, but here are two basic tips.  First, you must have adequate capital to (a) purchase the business, (b) operate the business (down payment, closing costs, working capital and growth capital), and (c) maintain cash reserves in case things don’t go exactly as planned.  Second, don’t expect to sit behind a desk and work on business plans. Successful buyers put in long hours to learn every aspect of a new business, and do whatever it takes to succeed.

Q: How can I be sure I (we) don’t overpay for a business?
First of all, be prepared to pay a fair price. Don’t make the mistake of automatically assuming that a business is overpriced. Some are and some aren’t. No two businesses are the same so it’s wrong to apply a simple price rule of thumb to every business – even though that’s exactly what many people will tell you to do. If your target business has an asking price, ask how that price was determined. If we represent the business, with our client’s permission we can share our analysis with you, or refer you to independent value analysts. Be sure to use an independent appraiser that has appropriate experience and credentials, and access to data to support their conclusion. If you intend to obtain acquisition financing from a bank, the lender will probably require an independent business appraisal before funding the loan.

Q: Do I need an attorney?
Yes. We advise you to have an attorney to prepare or review legal documents and examine the legal aspects surrounding the business you acquire. It is critical that your attorney has experience handling business sale transactions, and the time available to respond on a timely basis. When an attorney doesn’t have the right experience, you pay to educate them, and, worse, pay to have your deal spoiled. We know several experienced business transaction attorneys who know how to get deals done and mitigate legal risk. Your attorney will be, and should be, looking after your interests; however, remember that the seller’s interests must also be met for a deal to occur. Transactions get done when a balance is struck, and a win-win is achieved. Also, keep in mind there is no such thing as a risk-free acquisition. Every investor makes a leap of faith when acquiring a business.

Q: Why buy a business, versus start one from scratch?

Acquiring an established business has many advantages over starting from scratch. Here are a dozen of them:

  1. Immediate cash flow
  2. Proven products, services, location and markets
  3. Customers are already spending money with the company
  4. Brand and market awareness
  5. Employees in place – hired, trained and proven
  6. Proven equipment, installed and working, with maintenance records
  7. Established systems, procedures, policies, inventory levels, licenses and permits
  8. Established suppliers and credit
  9. Base your financial projections on actual results, not wishful thinking
  10. More financing options
  11. Training/transfer assistance from the seller
  12. Reduced financial risk
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