Buying a Business
Do You Want To Buy a Business?
The market value of a business is determined by a professionally prepared valuation.
Buyers are the ones who determine the “sale price.”
As professional intermediaries, we understand the process and will work with buyers to obtain their goals.
Buyers should be open to work with the sellers to make this a winning project. Otherwise, it is highly unlikely a deal will happen. No one wants to sell at the bottom price and conversely no one wants to buy at the top price. As intermediaries we pull both parties together. We will assist in finding other professionals like bankers, financial people and lawyers to aid in the process.
Astra’s goal is to find you a company that meets your acquisition criteria. We will conduct a search for registered buyers with no up-front fee for conducting a search for a suitable business.
Working with Buyers: Procedure Overview
- We must first identify your business’s acquisition target opportunities.
- Establishing the search criteria that define the parameters of the business you wish to acquire.
- Review databases of companies that meet the search criteria.
- Contact the owners of the target companies to determine if they are motivated, with intention to sell the company.
Ten Steps to Closure
After our initial contact with the prospective buyer regarding the business opportunity, they are asked to sign confidentiality / non-disclosure agreement and a buyer qualification form. Upon receipt of these forms, we then proceed to the next stage. We review the agreements with the buyer and ask if they understand the confidentiality agreement, as our arrangement includes the agreement to pay Astra and their client, the maximum amount allowed under the local court of the province or state, as mitigated damages, should the prospective buyer breach this contract. The next step is to verify the buyer’s financial capability and also to review their references to qualify the prospective purchaser’s financial capability to complete the transaction. This is a mandate from the clients we represent.
The buyers are then provided with the one-page Confidential Business Information Statement (CBI – seller profile).
If after reviewing the brief summary the buyer would like more details, we will then provide them with the Information Package.
This comprehensive business review (CBR) package covers most of the questions a potential buyer would ask. However, there are usually many more questions that will come from their review.
Should the prospective buyer want to go to the next step and would like copies of the financial statement, we will then introduce the buyer’s name to the seller for approval and obtain permission to release the financial statements
After we have introduced the buyer to the seller and qualified the buyer’s financial capability of completing the transaction, and the buyer has reviewed the financial statements, it is now time to decide whether you wish to pursue this business opportunity.
The next step would be to have a conference call and or meet with the seller to view the business in operation. Should either the buyer or seller not want to go to the next step, we will ask the buyer to return or destroy the information package.
Should the buyer wish to proceed with making an offer, we will then assist in preparing the “Letter of Intent” outlining the details for your consideration.
After presentation of the Letter of Intent, we shall review, with you, the terms contained therein. It is at this point you should review all the implications. The buyer is then advised of the seller’s reply to the Letter of Intent
Upon presentation and acceptance of the Letter of Intent, a certified cheque, as the initial deposit, is sent to the seller’s lawyer to be held in the sellers’ lawyer’s trust account.
The buyer will enter into a period of due diligence. This is the crucial time in the sale. We shall work diligently to keep the momentum going forward while working with the buyer’s professional advisers.
The buyer often requires assistance in raising financing for the venture and may require the services of experts in equipment and property appraisal.
After a successful conclusion of the due diligence period, the buyer is asked to sign a waiver of Conditions Precedent (subject conditions) in the contract. A signed copy of this waiver agreement is then presented to the seller.
A further deposit is made to the seller lawyer’s trust. The total amount of the deposits is around ten percent of the sale price. All deposit money now become non-refundable.
Then comes the counting of the inventory and pricing. All parties are expected to participate. However, we have successfully used professional people to do this as it eliminates the chances of any misunderstandings occurring resulting in the collapse of the sale.
Closing sometimes can be elusive as the lawyers now get involved. Their responsibility is to make sure there are no outstanding debts, liens or lawsuits outstanding. We will follow the transaction day by day until closing to make sure everything goes smoothly.
We must inform both the Buyers and the Sellers
if we are acting for both parties.