The safest and most cost-effective way to approach the purchase of a business is to look at it as a process of elimination, involving a number of steps. Each step is only undertaken after the successful completion of the previous step.
The first step in the buying process is to understand your own personal situation.
The next step, once you have found a business that you would like to buy, is to make an offer. An offer can be made up of many things, not only a dollar amount, but also any special conditions that you require such as; being subject to finance, time for due diligence (see below) or perhaps a building inspection.
After agreeing on price a purchaser is usually permitted to conduct their own research or due diligence into the business to ensure that everything is in order. Completing due diligence is a very important step that should never be over looked. Due diligence can involve advice from an array of professionals such as accountants, building inspectors and legal representatives.
Once you have a verbal offer and acceptance with the seller the Sale Contract is drawn up.
Better Business Brokers will seek “Instructions” from both parties, these instructions will be provided to both of your legal representatives for them to prepare the basis of the Sale Contract. The contract will outline such things as the timeframe for your due diligence, the date that the deposit is to be paid, the settlement date, along with all of the terms and conditions of this particular sale.
Both parties sign the contract; at this stage the sale is known as “Under Contract”
Prior to a sale becoming “unconditional” there is a possibility that the sale may not proceed due to any of the previously mentioned special terms and conditions not being met, for example obtaining your approval for finance.
Once all of these special conditions have been met, the sale becomes “unconditional” meaning that there are no longer any situations that will prevent the sale from proceeding to Settlement.