How to Buy a Business

A Step By Step Guide

a man writes on a glass wall deciding if it is the right time to buy a business

1. Decide you would like to buy a business

This should not be a decision that happens overnight. You should understand all the potential outcomes and how it will affect you, your family, your lifestyle, and your future.

As a buyer, you may be tempted to begin searching for businesses for sale without doing any preparation. You will most likely be asked to fill out a Personal Financial Statement that will help demonstrate your ability to acquire a business. 

Note that while you will be qualifying a business to make sure it fits what you are looking for, the Seller, the Seller’s Landlord, or Franchisor will also be doing the same diligence on you to make sure YOU are qualified.


2. Search for a business that interests you

Next, we can begin identifying business opportunities available that are best suited for you based on your skills, experience, and interests. Is this is business you like and understand.  

After signing confidentiality agreements and gathering preliminary information on the businesses that best meet your criteria. This process involves the signing of confidentiality agreements for each prospect business. 

Confidentiality is the most important part of any deal, and understand that before ANY information is provided, you will be required to fill out an NDA/CA, and you are liable for any damages that occur to a business based on your negligence in breaking the rules of confidentiality.

Consider calling business brokers with businesses for sale in Oklahoma.

a paper cutout of a magnifying glass illustrates how detailed the process is to search for a business for sale in oklahoma
a closeup of an ipad with charts and graphs

3. Review the business(es).

A more in-depth due diligence period will exist, but you must do as much up-front research as you can to vet the business you inquire about.  This includes site drive by but not touring yet.

4. Have a conference call or in-person meeting with the seller/owner of the business.

If there is no integrity between a buyer and seller, the deal will never get to the closing table. Ensuring an amicable relationship with both parties will create trust and a sense of cooperation that allows the deal to progress. Compatibility is usually determined only after a Buyer and Seller can meet face to face. 

To better understand the businesses that we have now targeted, you will have the opportunity to meet with the sellers of those businesses. The meeting will usually begin with a tour of the business. This includes both the areas opened to the public as well as the areas that are reserved for employees only. 

This may or may not being during regular business hours.  The buyer and seller will both have the opportunity to ask questions of each other to ensure that the business and the sale is a good match. This is not the appropriate time to negotiate price and terms of the business, as this can be a very sensitive topic that should only be handled by the broker. 

To successfully transfer ownership of a business between parties, the two parties need to feel comfortable with one another. Negotiations at a buyer/seller meeting can cause ill will with one or both parties and should only be handled in the offer stage.

a conference call around a table and a speakerphone
a closeup of two business dressed adults negotiating an offer

5. Make an offer that is presented to the Seller.

When you decide which business is right for you, we can assist you in putting forth an offer on the business in the form of a letter of intent. This process could involve a tense negotiation period. 

There is more to negotiating a contract than just the purchase price. You will want to make sure that you not only have a favorable asking price, but that negotiations should be focused on the terms of the sale as well.

6. Mutual acceptance of the final offer.

The deal is done and agreed upon by all parties. 

a handshake with a signed contract on a table

7. Escrow Deposit is made. Due diligence follows.

After a purchase contract has been executed, it is time for the buyer to perform due diligence on the business. This is a critical time. 

This is when you have the opportunity as a buyer to analyze the business in-depth. There normally exist standard out-clauses in the purchase agreement that allows for contingencies. 

This ensures that it is possible to make the contract null and void if the business does not hold up during the financial due diligence period.

a laptop with metrics and bar graphs displayed
two people review details of selling a business

8. All other contingencies of the contract are met (lease, franchise, etc.), and the closing date is addressed.

Aside from the due diligence, there are often other contingencies that are mostly revolved around qualifying the candidate. The landlord has to accept the new prospect buyer. 

If a franchise is involved in the deal, the Franchisor must approve the candidate as well.

9. Closing documents are prepared by the buyer and seller’s attorney’s.

These documents are constructed based on the nature of the deal by a 3rd party attorney that represents the transaction. These documents are typically provided before closing with enough time for the buyer and the seller to consult their private attorneys (if they desire). 

These documents sometimes include, but are not limited to: Closing Agreement, Closing Statement, Buyer/Seller Indemnification, Bill of Sale, Assignment of Purchase Agreement, Broker/Closing Attorney Disclosures, Security Agreement, Buyer/Seller’s Affidavit, Promissory Notes, Schedule A of Equipment List, Guaranty, Document Stamp Recording Documents, Covenant Not To Compete, Asset Allocation Agreement, etc.

an attorney reviews a contract with the scales of justice in the foreground
a warehouse with full shelves and industrial boxes

10. Inventory is taken, and a final walk-through is conducted.

Sometimes as close to closing as possible, the buyer and seller will meet at the business location (if applicable), and a final inventory amount will be collected (if applicable). 

The buyer and seller will also walk through the location and ensure that all items that are conveying in the sale (if applicable) are still working and present.

11. A closing takes place.

The closing is the day the transfer of the business from the seller to the buyer takes place. A few days before closing you should receive the closing documents to be reviewed by you and your attorney. 

The day of closing will include the signature of pertinent paperwork. Disbursements of funds take place. It should be an exciting day for you as the buyer and for the seller.

a closeup of two hands with a key being passed from one to the other
an artistic photo of a man in a derby hat placing the last oversized puzzle piece into a puzzle that spans an entire wall

12. Post-Closing - the final pieces

Many times there will be certain measures that will need to be completed post-closing. This may include the transfer of utilities, merchant services, and vendor applications for credit. 

According to what was stated in the purchase contract and closing documents, accounts receivable and accounts payable may still need to be completed between the buyer and seller post-closing.